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European stocks mixed despite strong Chinese GDP data

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2 min read
A staff member works on a production line of Dalian Special Steel Products Co Ltd in Dalian, Liaoning Province of China. Photo: Liu Debin/VCG via Getty Images
A staff member works on a production line of Dalian Special Steel Products Co Ltd in Dalian, Liaoning Province of China. Photo: Liu Debin/VCG via Getty Images

European stock markets were mixed on Monday during a quiet session where US markets were shut.

Stocks opened lower across the continent before paring back early losses. The FTSE 100 (^FTSE) ended the session down 0.2% in London, while the CAC 40 (^FCHI) rose 0.1% and the DAX (^GDAXI) had gained 0.4%.

“European markets have continued on in their quiet way today, marking time without the US and feeling oddly bereft after bank earnings on Friday heralded the start of reporting season,” said Chris Beauchamp, chief market analyst at IG.

Aviation stocks came under pressure in London as a UK ban on international travel corridors, announced on Friday, came into effect. British Airways-owner IAG (IAG.L) fell 0.7%.

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US markets were shut for Martin Luther King Day. Chinese stocks had rallied overnight after data showing China’s economy was growing at a faster rate than it had been before the onset of the COVID-19 pandemic.

Fourth quarter Chinese GDP data published early on Monday showed the world’s second largest economy grew by 6.5% at the end of 2020. The growth was slightly better than economists had expected and means China’s economy grew by 2.3% across 2020 as a whole, despite the COVID-19 pandemic, which originated in the Chinese city of Wuhan.

“This makes China the only major economy across the globe which avoided contraction last year,” said Jim Reid, a strategist at Deutsche Bank.

The data helped Chinese stock markets outperform regional peers. The Shanghai Composite (000001.SS) gained 0.8%, the Shenzen Component (399001.SZ) rallied 1.6%, and the Hong Kong Hang Seng (^HSI) rose 1%.

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Elsewhere in the region, Japan’s Nikkei (^N225) fell 1%, South Korea’s KOSPI (^KS11) dropped 2.3%, and Australia’s ASX 200 (^AXJO) slid 0.8%.

Connor Campbell, a financial analysts at SpreadEx, said investors in Europe had concerns about weaker-than-expected Chinese retail sales figures, published alongside the GDP data. Retail sales grew by 4.6% in December, which was well below forecasts and a deceleration on the prior month.

“Essentially the Chinese economy might be bouncing back – industrial production was also up, from 7.0% to 7.3% – but not in the way Western investors want,” Campbell said.

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