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Friday, August 9, 2013

Markets drift despite more positive China news


Another round of largely better than expected Chinese economic data failed to lift the lacklustre mood in financial markets on Friday amid the traditional summer lull in trading activity.

Figures showed inflation in July steady at an annual rate of 2.7 per cent. That was below market expectations for a modest increase to 2.8 per cent. Meanwhile, industrial production rose 9.7 percent in the year to June, ahead of expectations for a 9 per cent increase. The only modest disappointment was the news that retail sales grew 13.2 percent in July from a year earlier, slightly slower than June's growth rate.

Overall, analysts said the figures added weight to the argument that the recent soft patch in the world's second-largest economy may have come to an end. However, market reaction was fairly muted, as stocks had rallied already on Thursday after strong Chinese trade numbers.

In Europe, the FTSE 100 index of leading British shares was up 0.2 percent at 6,544 while Germany's DAX fell 0.2 percent to 8,303. The CAC-40 in France was 0.1 percent lower at 4,059.

Wall Street was poised for a subdued opening, with both Dow futures and the broader S&P 500 futures 0.4 percent lower.

With the scheduled economic news on the light side, analysts think U.S. markets may drift in the run-up to the weekend. Trading levels in the U.S. in particular often dry up in the latter part of August and only pick up again once traders return to their desk following the Labor Day holiday in early September.

Currency markets were fairly subdued, too, with the euro 0.1 percent higher at $1.3376 and the dollar down 0.1 percent at 96.47 yen.

Earlier in Asia, Japan's Nikkei 225 index ended 0.1 percent higher at 13,615.19 while South Korea's Kospi closed 0.2 percent lower at 1,880.71.

The mood in China was a bit more positive after the figures. The Shanghai Composite Index gained 0.4 percent to 2,052.24 and the Shenzhen Composite Index for China's second, smaller stock market gained 0.2 percent to 996.42. Hong Kong's Hang Seng gained 0.7 percent to 21,807.56.


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