MILANO – 2.00 pm The expected slowdown in China arrives in the fourth period of the year, but the intensity of the slowdown is lower than expected and the European stock markets are trading slightly higher, with Wall Street remaining closed today and after mixed indications from Asia . Nonetheless, the Central Bank of Beijing immediately set in motion to support markets and the real economy, cutting interest rates for the first time in over two years to ensure that the period of lack of vigor due to the anti-Covid restrictions remains. as contained as possible. A decision that puts it in sharp contrast to what the other central banks are doing, which with very few exceptions are planning to raise interest rates.
China slows down, PBOC flexes its muscles
In fact, in the fourth quarter, China recorded a GDP up by 4% per year (less than 4.9% in July-September), over the + 3.6% expected by analysts, closing the whole of 2021 with an increase of 8. , 1% which is the highest in a decade. This was reported by the National Bureau of Statistics, according to which the increase on a cyclical basis is 1.6%, better than 0.2% in the previous three months and 1.1% expected on the eve: despite the growth year is better than estimates, “the Chinese economy is facing triple pressure, including shrinking demand, supply shock and weaker expectations,” the Bureau warned. Fourth quarter annual growth is the slowest since the second quarter (+ 3.2%) of 2021, amidst the problems caused by the energy crisis, supply chain bottlenecks, real estate tightening and Covid outbreaks. 19, which recently saw the dreaded Omicron variant officially appear. A variant to which the authorities have reacted harshly, decreeing closures that have partly slowed down sales and on the other hand created some difficulties, for example in some ports. In fact, among the data that emerged there is the fact that China’s retail sales rose by just 1.7% on an annual basis, doing much worse than analysts’ expectations, which were for growth equal to +3.7 %. Strong deceleration compared to November, when the figure had risen by 3.9%. On the other hand, industrial production did well, growing by 4.3% on an annual basis, more than the + 3.6% estimated by analysts, and strengthening compared to + 3.8% in November.
As mentioned, the Central Bank immediately activated this situation, which cut the financing costs of its medium-term loans for the first time since April 2020, in spite of market expectations: the PBOC reported that it had reduced the rate on 700 billion yuan ($ 148.6 billion) of 1-year medium-term (MLF) loans to some financial institutions of 10 basis points to 2.85%, up from 2.95% in previous transactions. With 500 billion yuan of Mlf loans maturing today, the transaction brought new injections of funds into the banking system to 200 billion net. It also lowered the financial costs of seven-day reverse repurchase agreements, or repurchase agreements, of the same margin to 2.10% from 2.20%, when it offered another 100 billion yuan of reverse repurchase agreements to the banking system. , compared to 10 billion in cash due today.
EU markets cautious, focus on rising bond yields
European markets confirmed their cautious rise beyond mid-day. Milano marks a gain of 0.49%. Tim is down after the CDP plan for reorganization, tension remains high at Generali with a new resignation from the board of directors. London salt by 0.76%, Frankfurt 0.42% e Paris 0.72%.
The American stock market will be closed for the day dedicated to Martin Luther King, meanwhile the bond front is heated. As a note Bloomberg, a generalized rise in bond yields following last Friday’s sell-off on Treasuries, sparked by the belief that the Fed will raise rates as early as March and could go ahead with three more tightenings during the year. The 10-year US bond yield hit its highest since January 2020 on Friday, futures are down slightly today. Stable opening for the spread between ten-year BTPs and German Bund counterparts. The differential stands at 138 points, in line with the closing date on Friday. The yield on Italian bonds is 1.349%.
Wall Street is back from a second consecutive week of decline for indices, with the Dow losing 0.9% and the S & P500 and Nasdaq both losing 0.3%. Great attention is now being placed on the quarterly reports, from which analysts expect to understand whether companies will be able to pass the price increases to consumers to defend their margins.
In the morning, the stock exchange Tokyo has recovered from the lows in a month and ended the first session of the week positively, driven by the securities of the technology sector and the rise from the US stock markets. The benchmark Nikkei index advanced 0.74%, to 28,333.52, with a gain of 209 points. On the currency front, the yen weakens against the dollar at 114.40, and at 130.60 against the euro. Mixed the reaction of the other lists to the Chinese figure: Shanghai ends up by 0.6% e Shenzhen 1.5%. Negative instead Hong Kong with the Hang Seng falling by 0.7%.
Among the commodities, the prices of the Petroleum they travel steadily as Libyan production increases offsetting supply concerns. WTI crude oil futures are flat at $ 83.82 a barrel while Brent crude futures are down 0.31% at $ 85.79 a barrel.
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