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“Fair enough I suppose” seems to be markets’ response to China’s comparatively-modest 5% 2023 growth target announced on Sunday.
There were small dips in onshore Chinese stocks, the yuan and oil, but Hong Kong shares followed the rest of the world higher, and MSCI’s world index is up 0.2% so far on Monday.
This year’s growth target of around 5% was at the low end of expectations, as policy sources had recently told Reuters a range as high as 6% could be set. It is also below last year’s target of around 5.5%, though up from last year’s actual 3% figure.
Investors, at least those looking for good news, said they were relieved policymakers were aware of the multiple headwinds the economy faces and focused on longer term priorities, rather than chasing a short-term sugar rush.
“Overall, the government realises the strength and weaknesses faced by the economy. It is not overly optimistic and does not spend too much to boost growth. It focuses more on longer-term growth challenges,” said ING’s chief economist for Greater China Iris Pang.
“In our view, achieving these targets would not be very challenging,” she concludes.
On the subject of investors looking for good news, U.S. treasury yields are down for a second session in a row, with the benchmark 10-year yield at 3.93%, nearly 16 basis points lower than Thursday’s over two-month top of 4.091%.
That helped underpin both Monday’s global share rally.
The next week or so will show whether or not this is a false dawn with U.S. payrolls numbers due on Friday, U.S. CPI released March 14, and, before then, Fed chair Jerome Powell’s semi annual congressional testimony on Tuesday and Wednesday this week.
It was last month’s stonking payrolls figure, followed by a steady inflation print that caused markets to finally accept the U.S. Federal Reserve will not be cutting interest rates this year.
Key developments that may provide direction to U.S. markets later on Monday:
* U.S. Factory orders.
* U.S. Three month and six month bill auctions
Graphic: China sets 2023 GDP growth target at around 5% https://www.reuters.com/graphics/CHINA-PARLIAMENT/PLANNER/zjvqjydmwpx/chart.png
(By Alun John, editing by Ed Osmond alun.john@thomsonreuters.com. Twitter: @reutersMikeD)
