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Global Equity Markets Steady on China Data


Global equity markets were mostly steady on Monday after data showed China’s gross domestic product (GDP) decelerated in 2018, underlining the need for additional stimulus from Beijing.

Major US stocks indexes took a break for the day in observance of the Martin Luther King Jr. holiday.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan were up 0.03 percent to $498.94, having risen 0.2 percent to touch its highest since early December.

The Shanghai Composite index rose 0.5 percent to CN¥3,185.64, while Japan’s Nikkei 225 added 0.2 percent to ¥20,719.33.

MSCI's emerging market stock index also hit its highest level on Monday, before easing to trade with a 0.8 percent gain to $1,017.99.

Friday’s reports about US Treasury Secretary Steven Mnuchin considering lifting some or all tariffs on Chinese imports mainly drove equities higher in China that day, although the news was later denied.

US President Donald Trump stated on Saturday that they are making progress with a trade deal with China, but denied that he was planning to lifting duties.

Shares worldwide seemed to have found some support on Monday after data from the National Bureau of Statistics (NBS) showed growth in the world’s second biggest economy fell 6.4 percent in the fourth quarter from the prior year, similar to levels last recorded in early 2009 during the global financial crisis.

The figure dragged full year GDP expansion to 6.6 percent, the slowest annual rate since 1990, although it was in line with expectations and had some positive aspects, including better-than-expected results in December factory output and a more robust services sector.

Head of Macro Strategy Timothy Graf said on balance, the data is relatively positive and does not point to a hard landing, adding that the consumption data being better than expected is the positive takeaway in that China is trying to engineer a move towards a consumer-led economy.

Mounting signs of contraction in China, which has provided almost a third of global expansion in recent years, has stirred fears about risks in the world economy in recent weeks and putting profits under heavy pressure for companies like US tech giant Apple Inc.

Upcoming Brexit Plan B

European stocks stood on the red territory on Monday, with the pan-European STOXX 600 index falling 0.2 percent to €356.08, as investors traded with caution ahead of British Prime Minister Theresa May’s unveiling of her Plan B for Brexit to the parliament later in the day.

May is set to return to parliament later in the day to present her Plan B after her initial Brexit plan was voted down by a higher-than-expected margin last week.

Head of Economic Research Chris Scicluna said May’s latest statement on her Brexit intentions is likely to suggest that her Plan B is simply to carry on with her Plan A, adding that discussion would be held in the hopes of avoiding the major self-economic harm of a no deal.

The uncertainty dragged the British pound after reaching as high as $1.3000 last week, while a lower sterling bolstered the UK’s FTSE 100 by 0.02 percent to £6,969.91.

Frances’ CAC 40 was down 0.2 percent to €4,865.13, while Germany’s DAX shed 0.4 percent to 11,155.85.

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