The Friday Market Minute
- Global stocks extend gains after China GDP data shows the weakest growth in three decades, but December readings of retail sales and industrial output surprise to the upside.
- China's 2019 GDP slows to 6.1%, the weakest since 1990, sparking bets of near-term stimulus from Beijing before the lunar new year holidays next month.
- European stocks open at fresh record highs following last night's rally on Wall Street, with the trade-sensitive DAX index pacing gains.
- The U.S. dollar hits an 8-month high against the yen as sentiment improves following this week's U.S.-China trade agreement and domestic data showing a firming labor market and solid retail sales.
- U.S. equity futures suggest more opening bell gains on Wall Street ahead of December housing data at 8:30 am Eastern time and earnings from Schlumberger and Kansas City Southern before the start of trading.
U.S. equity futures edged higher into record territory Friday, while global stocks tested fresh all-time peaks, even as data showed China's economy grew at the slowest pace in three decades last year thanks in part to its damaging trade war with Washington.
China GDP slowed to 6.1% for the whole of 2019, the National Bureau of Statistics said Friday, down from a 6.6% pace in the previous year and the weakest annual growth rate since 1990.
Fourth quarter GDP, however, held steady at 6%, and December data detailing industrial output, retail sales and government investment all surprised to the upside, suggesting Beijing has been able to weather the worst of the slowdown and could see a near-term bump from the phase one trade agreement it reached with President Trump earlier this week.
Still, with the government's stated ambition of creating a 'moderately prosperous' China over the next decade, an aim that will likely require steady 6% to 6.5% growth, most analyst believe Beijing will need to add further stimulus to the world's second largest economy in the coming months -- either via tax cuts or interest rate reductions -- in order to accelerate growth.
That bet, alongside U.S. data yesterday that indicated solid industrial activity in the Atlantic region, rising retail sales and the fifth consecutive decline in weekly jobless claims, added value to global stocks Friday and looks likely to bump Wall Street towards fresh record highs at the opening bell.
Futures contracts tied to the Dow Jones Industrial Average suggest a 106 point gain at the start of trading while those linked to the S&P 500 -- which closed above the 3,300 point mark last night -- indicate an 11.5 point advance for the broader benchmark.
European stocks were also firmer by mid-day trading, with the Stoxx 600 rising 1% to a new record high, lead to the upside by basic resource and industrial stocks, while the trade-sensitive DAX index added 0.67% in Frankfurt. In London, Britain's FTSE 100 was marked 1% higher by mid-day.
Overnight in Asia, a weaker yen helped Japan's Nikkei 225 rise 0.45% on the session to close out the week with a modest 0.8% gain at 24,041.26 points. China stocks ended modestly higher on stimulus bets, helping the region-wide MSCI ex-Japan index add 0.27% heading into the final hours of trading.
Away from equities, the U.S. dollar rose to an 8-month high against the yen as risk sentiment improved following this week's U.S.-China trade deal and the in-line GDP figures from Beijing, while benchmark 10-year Treasury bond yields edged modestly higher to 1.827%.
Global oil prices were also firmer in early European trading, thanks in part to encouraging data from China, which showed crude refinery rates rose 7.6% last year to the equivalent of 13.04 million barrels per day, Gains were capped, however, by an assessment from the International Energy Agency, which forecast that world supply would outstrip demand for the whole of 2020.
Brent crude futures contracts for March delivery, the global benchmark for pricing, were last see seen 36 cents higher from their Wednesday close in New York and trading at $64.98 per barrel, while WTI contracts for February, which are more tightly-linked to U.S gasoline prices, were marked 32 cents higher at $58.84 per barrel.