NEW YORK, March 7 — Global stocks were mixed yesterday ahead of key Federal Reserve congressional testimony as China set a lower-than-expected target for 2023 economic growth.
Wall Street looked poised early yesterday 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, today and tomorrow, 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 per cent. Frankfurt stocks rose 0.5 per cent and Paris added 0.3 per cent.
China’s outgoing Premier Li Keqiang on Sunday said the country’s economy would expand “around five per cent” this year, slightly below what analysts had predicted.
The world’s second-largest economy grew three per cent last year, missing its target of around 5.5 per cent 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. — AFP
