China’s stocks rally after worst economic growth in almost 30 years leads to hopes the government will step in with stimulus


  • Global stock markets were mixed Monday after China announced that its economy had slumped to its slowest rate of annual growth in almost three decades.
  • Chinese stocks climbed on optimism the government would react to the news by increasing stimulus efforts on the country’s economy.
  • European investors, however, were less heartened, with stocks on the continent falling in the first hour or so of trade.
  • The Chinese economy grew by 6.6% in 2018, down from 2017’s 6.9%, official data indicated on Monday, marking the lowest annual increase in China’s gross domestic product since 1990.
  • You can follow the latest market moves live with Markets Insider.

China on Monday said it experienced its slowest rate of annual growth in almost three decades in 2018, sending shares in the region higher on optimism the government would deploy fresh stimulus to shore up the economy.

The Chinese economy grew by 6.6% last year, down from 6.9% in 2017, official data indicated on Monday, marking the lowest annual increase in gross domestic product in China since 1990, when the country was hit by international sanctions in the aftermath of the Tiananmen Square massacre.

“The market’s positive reaction to the data comes from growing hopes of further stimulus from Beijing,” Jasper Lawler, the head of research at London Capital Group, wrote in an email. “The economy is slowing, the markets know that. However, they expect Beijing to act with more supportive policies.”

Growth in the fourth quarter was the slowest of any quarter since the first quarter of 2009, when the global financial crisis was unfolding. According to China’s National Bureau of Statistics, GDP grew by 6.4% in the last three months of 2018 compared with the same period in 2017.

Read more:A drastic plunge in shipping to China is the latest horrible signal for its economy

“Should data continue to worsen going forwards, then we could start to see increased pressure on riskier assets, not just in Asia, but globally; as fears for the global market grow,” Lawler said.

Outside Asia stocks were somewhat less positive, with European stocks losing ground.

US stock markets are closed Monday for the Martin Luther King holiday.

Here’s what’s going on across global markets as of 10 a.m. GMT (5 a.m. ET):

  • All major Chinese indexes gained at least some ground Monday, with both the Shenzhen Component and the China A50 up about 0.6%. The Shanghai Composite, the country’s benchmark index, was 0.6% higher.
  • Elsewhere in Asia, Japan’s Nikkei 225 ended the day 0.3% in the green, while South Korea’s KOSPI was flat, up just 0.02%.
  • Moving to Europe, virtually all major indexes on the continent saw marginal losses in the first hour of the week, with Italy’s FTSE MIB, down 0.8%, the biggest loser. The Euro Stoxx 50 broad index was down 0.3%.
  • Britain’s FTSE 100 gained a small amount of ground, benefitting from a slump in the pound, which has helped push the FTSE up 0.2%.

China Economy
Stock Market
Shanghai Composite
Economic Stimulus

Read More

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.