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China GDP, Biden's First Actions, Keystone Goes Green - What's up in Markets

Published 18/01/2021, 10:53 pm
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By Geoffrey Smith 

Investing.com -- China’s economy grew faster than expected in the fourth quarter, allowing it to post growth of 2.3% for the whole of 2020. Joe Biden plans to reverse Donald Trump’s legacy with a flurry of immediate executive orders, and the Keystone XL pipeline is desperate not to be the target of one of them. Germany’s CDU anointed a successor to Angela Merkel, and Italy is teetering into a new political crisis. Here’s what you need to know in financial markets on Monday, January 18th.

1. China's GDP grew at 6.5% rate in Q4

China cemented its status as the only major economy not to shrink last year. Figures released on Monday showed gross domestic product rose 2.3% on the year, better than the 2.0% expected, thanks to annualized growth of 6.5% in the final quarter of the year.

The quarterly growth figures were in turn supported by demand for Chinese goods, already evident in last week’s record trade surplus. Industrial production growth accelerated to 7.3% from 7.0% in November, but retail sales growth again disappointed, slowing to 4.6% from 5.0%.

The figures, which carry the caveat attached to all Chinese GDP data, come at a time when Beijing is anxious to show its superior handling of the pandemic. A World Health Organization team arrived in the country last week on a mission to clarify the origins of Covid-19, after months of administrative delays by the Chinese side.

2. Biden's first executive orders

President-elect Joe Biden will issue a flurry of executive orders in his first days as president with the explicit aim of reversing as much as possible of his predecessor’s agenda.

The orders will include rejoining the Paris Climate Accord, ending a ban on travelers from Muslim-majority countries and mandating the use of face masks, both on federal property and for interstate travel, whether by road, air or rail.

Other orders planned include an extension of the moratorium on evictions and the expansion of testing for Covid-19.

3. Stocks follow U.S. lower on virus concerns

Global stocks were mostly lower on Monday, following the weakness on Wall Street on Friday that stemmed from the weaker-than-expected retail sales report for December.

In Asia, the Japanese and Korean benchmarks were both down by nearly 1%, while Chinese indices bucked the trend on the back of the GDP data.

In Europe, concerns about the pandemic’s latest wave dominated, with the the U.K. FTSE 100 and the French CAC 40 each losing 0.3%. France extended its 12-hour curfew to the whole of the country over the weekend, while Germany is set to debate tougher and longer restrictions on Tuesday.

U.S. equity markets are closed for the Martin Luther King Day holiday. The dollar has opened the week solidly, rising 0.1% to 90.805 as of 6:30 AM ET (1130 GMT).

4. Plus ca change, plus c'est la meme chose - in both Germany in Italy

Germany’s biggest party opted for continuity candidate Armin Laschet to succeed Angela Merkel as its head at the weekend.

Laschet has consistently supported Merkel’s policy on Europe, albeit showing himself to be more open to dialogue with Russia than Merkel, whose relations with Vladimir Putin were wrecked by the invasion of Ukraine in 2014.

Elsewhere in Europe, Italian bond yields edged higher as Prime Minister Giuseppe Conte continued his search for new allies to secure a majority in parliament. Former center-left Prime Minister Matteo Renzi pulled his small Italia Viva party out of the coalition last week, ostensibly in a dispute over the government’s handling of the economy during the pandemic.

5. Keystone XL fights for survival

Crude oil prices fell but industrial metals rose as China’s GDP data painted a picture of robust near-term demand.

By 6:45 AM ET, U.S. crude futures were down 0.2% at $52.32 a barrel, while Brent futures, the international benchmark, were down 0.4% at $54.88 a barrel.

Anticipating the first wave of executive orders from Biden, the consortium behind the Keystone XL pipeline, which aims to ship crude from Canada to the Gulf Coast, is reportedly preparing plans to use only renewable sources of energy to operate the pipeline, while also using only unionized labor. Biden and other Democrats have been constant opponents of the pipeline.

 

 

 

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