China's target of around five percent growth this year surprised markets
New York (AFP) - Global stocks were mixed Monday ahead of key Federal Reserve congressional testimony as China set a lower-than-expected target for 2023 economic growth.
Wall Street looked poised early Monday to extend the rally from late last week, but momentum faded later in the day. Major US indices finished near flat.
The movements come as Fed Chair Jerome Powell is set for two days of testimony before Congress, on Tuesday and Wednesday, where he will be pressed about the central bank’s efforts to counter inflation.
This would provide hints on what policymakers are thinking about price pressures, influencing the market’s movements.
“I really think it’s just position-squaring ahead of Powell’s testimony,” said Karl Haeling of LBBW.
But much of the key data that will inform the Fed’s next meeting will come after the hearings, including Friday’s government jobs report for February.
Earlier, London stocks finished the day down 0.2 percent. Frankfurt stocks rose 0.5 percent and Paris added 0.3 percent.
China’s outgoing Premier Li Keqiang on Sunday said the country’s economy would expand “around five percent” this year, slightly below what analysts had predicted.
The world’s second-largest economy grew three percent last year, missing its target of around 5.5 percent under the impact of strict Covid-19 containment policies and a property crisis.
China lifted its pandemic restrictions in December.
“China set itself one of the lowest gross domestic product targets in many years, hinting to investors that the big reopening boom may not be as positive for the global economy as hoped,” noted Neil Wilson, chief market analyst at Finalto trading group.
“Oil and other industrial commodities slipped on the news, whilst basic resources stocks in London were hit, dragging the FTSE 100 marginally into the red,” he said.
While markets were surprised by the Chinese announcement, OANDA analyst Craig Erlam said the lack of considerable stimulus to boost the economic recovery may be a blessing in disguise.
“One of the upside risks to inflation this year was a turbo-charged Chinese recovery which would drive up demand for a host of commodities from oil to iron ore and as a result prices,” said Erlam.
“So while we may not get the growth boost, we’re probably getting something far more valuable,” he added.
Oil prices rebounded after having earlier fallen on expectations that Chinese demand would not be as strong as forecast.
- Key figures around 2130 GMT -
New York - Dow: UP 0.1 percent at 33,431.44 (close)
New York - S&P 500: UP 0.1 percent at 4,048.42 (close)
New York - Nasdaq: DOWN 0.1 percent at 11,675.74 (close)
London - FTSE 100: DOWN 0.2 percent at 7,929.79 (close)
Frankfurt - DAX: UP 0.5 percent at 15,653.58 (close)
Paris - CAC 40: UP 0.3 percent at 7,373.21 (close)
EURO STOXX 50: UP 0.4 percent at 4,313.78 (close)
Hong Kong - Hang Seng Index: UP 0.2 percent at 20,603.19 (close)
Tokyo - Nikkei 225: UP 1.1 percent at 28,237.78 (close)
Shanghai - Composite: DOWN 0.2 percent at 3,322.03 (close)
Euro/dollar: UP at $1.0684 from $1.0635 Friday
Pound/dollar: DOWN at $1.2023 from $1.2036
Euro/pound: UP at 88.84 pence from 88.36 pence
Dollar/yen: UP at 135.95 yen from 135.87 yen
West Texas Intermediate: UP 1.0 percent at $80.46 per barrel
Brent North Sea crude: UP 0.4 percent at $86.18 per barrel