Market update: Chinese growth accelerates to 7.8% in the third quarter – 18.10.2013

Source: Henderson Global Investors

The S&P 500 closed at an all-time high on Thursday (+0.7%). The reopening of the US government and extension of the US debt ceiling has spurred speculation that the Federal Reserve (the Fed) will delay tapering its quantitative easing programme until later in the year or into 2014, which could provide near term equities support. Goldman Sachs closed sharply lower as the investment bank reported third quarter revenues below market consensus. Meanwhile, Google’s latest trading update exceeded both earnings and revenue estimates owing to new advertising channels. The Dow Jones finished flat, while the Nasdaq was up 0.6%.

Data from China brought some cheer to the markets. Third quarter gross domestic product (GDP) growth accelerated from the previous quarter, coming in at 7.8% year-on-year (yoy) on stronger exports and solid domestic demand. Stock markets in China, Hong Kong and Australia closed firmer today. The Shanghai Composite was up 0.2%, the Hang Seng advanced 1.1% while the S&P/ASX 200 gained 0.7%. But in Japan the Nikkei fell 0.2% owing to recent strength in the yen, which has hurt the share prices of exporting companies.

Waking up to the upbeat Chinese growth news, and expectations that the Fed will maintain its monetary stimulus programme for longer, European markets opened on a stronger footing this morning. At the time of writing, both the FTSE Eurofirst 300 and FTSE 100 are up 0.2%. Yesterday, UK retail sales were reported to have risen by a better-than-expected 0.6% month-on-month in September, following a 0.8% fall the month before.