World stocks lackluster as China growth slows

AP and AFP

KUALA LUMPUR/HONG KON–World stock markets were lackluster Monday, with Wall Street closed for a long weekend and China’s economic growth slowing.

China’s economy grew 7.7 percent in the quarter through December, down from 7.8 percent the previous quarter. For the full year, the economy expanded 7.7 percent, tying 2012 for the weakest performance since the 1990s.

China’s growth is far stronger than the United States, Japan or Europe. But an unexpectedly abrupt decline from the double digit rates of the previous decade has complicated the ruling Communist Party’s plans to promote more sustainable growth based on domestic consumption and reduce reliance on trade and investment.

“The `boom’ is ending, but sustained demand is just as important,” said Evan Lucas, market strategist with IG in Melbourne, Australia. UOB Kay Hian analyst Fan Zhang told Dow Jones Newswires: “We see more downside pressure for China’s economic growth in 2014, mainly due to tight monetary policy, rising funding cost and slow recovery of demand.” That was supported by Wendy Chen, Shanghai-based analyst for Nomura International, who told AFP: “Judging from the data, our outlook for 2014 remains that China’s economy will continue slowing down in the first half.”

In early European trading, Britain’s FTSE 100 was little changed at 6,828.19 and Germany’s DAX dropped 0.3 percent to 9,715.28. France’s CAC 40 added 0.1 percent to 4,330.66. Wall Street is closed Monday for Martin Luther King Day.

The Dow rose 0.25 percent but the S&P 500 fell 0.39 percent and the Nasdaq lost 0.50 percent. Analysts said the U.S. corporate reporting season will be in focus when Wall Street reopens Tuesday after some disappointing earnings so far. Markets will also be cautious ahead of the Federal Reserve’s next meeting on Jan 29.

Asian markets were mostly lower on Monday. Tokyo fell 0.59 percent, or 92.78 points to 15,641.68, Sydney lost 0.21 percent, or 10.9 points, to close at 5,295.0 and Shanghai ended 0.68 percent, or 13.70 points, lower at 1,991.25.

Hong Kong closed 0.88 percent lower, giving up 204.40 points to 22,928.95. However, Seoul rose 0.48 percent, or 9.30 points, to 1,953.78.

In Japan Nintendo’s share price dived 18.43 percent at one point in response to its announcement Friday that it expects a loss of 25 billion yen (US$240 million) in the year to March, reversing an earlier 55 billion yen net profit forecast. The firm managed to claw back some of the losses and ended down 6.14 percent. The sell-off added to pressure on the Nikkei index as the yen also rose against the dollar and euro on speculation the Bank of Japan will maintain its easy money policy when its policy board meets this week. Reports said officials will wait until they can gauge the effect of a sales tax due to be introduced in April.