China GDP figures boost world markets

[beijingwalker]

China GDP figures boost world markets
By finance reporter Sue Lannin

Updated January 18, 2012 10:07:44
Wall St Photo: The Dow Jones eased off session highs after mixed quarterly reports from banks. (Reuters)
Map: United States

Global share markets rallied overnight on hopes of more stimulus in China.

China's economy grew at an annual rate of 8.9 per cent in the year to December, a slowdown from the previous quarter when the economy grew at 9.1 per cent year-on-year.

That has investors speculating that Beijing will do more to boost its economy.

And a report from the United States Federal Reserve showed manufacturing in the New York region expanded at the fastest pace in nine months.

The Dow Jones Industrial Average closed up 0.5 per cent to 12,482, off session highs after a last-minute sell off among bank shares when Citigroup announced a fall in quarterly profits.

The S&P 500 rose 5 points to finish at 1,294.

Banking giant Citigroup says its fourth quarter earnings fell 11 per cent to $US1.2 billion on lower trading revenue due to the European debt crisis.

The bank also said it was cutting about 5,000 jobs, and its shares lost 8 per cent to $US28.25 on the lower than expected results.

But US bank Wells Fargo announced a record rise in its profits for the fourth quarter and the full year.

Quarterly income rose 20 per cent to $US4.1 billion on higher mortgage lending and annual profit increased 28 per cent to $US15.9 billion.

Wells Fargo shares rose 0.7 per cent to $US29.81.

And shares in Carnival Corp. fell 14 per cent as its Italian cruise ship operator, Costa Cruciere, tried to locate missing passengers after a cruise liner capsized in the Mediterranean.

It was a good night in Europe thanks to the better-than-expected China data and a record rise in business confidence in Germany.

Spain's cost of borrowing dropped, despite receiving a credit downgrade by Standard & Poor's, paying an average of 2.049 per cent to sell one-year bonds compared with 4.05 per cent in December.

The European bailout fund also sold bonds to investors after its S&P downgrade yesterday.

In London, the FTSE 100 rose 0.6 per cent to finish at 5,694.

And there were big gains on share markets in France and Germany; in Paris the CAC 40 gained 1.4 per cent to 3,270 and in Germany the Dax rose 1.8 per cent to 6,333.

The United Nations painted a gloomy picture of the global economy overnight.

In two new reports, the UN says large budget cuts in Europe could see economic growth halve across the continent this year and there is a higher risk of another global recession.

The World Economic Situation and Prospects report said growth in the European Union would only hit 0.7 per cent in 2012 because of austerity measures.

The United Nations Conference on Trade and Development expects world economic growth to slow to 2.6 per cent in 2012 if the eurozone debt crisis was contained.

It warns there is a "heightened risk of another global downturn" because of the failure of policymakers in Europe and the US to tackle their jobs and debt crises.

Commodity markets and the Australian dollar also saw a boost from the China data; spot gold rose to its highest price in more than a month overnight to nearly $US1,670 an ounce.

At 9:05am (AEDT) it has eased back to $US1,652.20 an ounce.

Tapis crude oil closed higher at $US122.03 a barrel in Singapore overnight and West Texas crude oil was higher at $US100.93 a barrel.

The Australian dollar was worth 103.8 US cents, 79.7 Japanese yen, 81.5 euro cents, 67.7 British pence and $NZ1.30.

 

[Smarterthanyou]

On the other hand Chinese stock market showed no 10 year gain. That's right .

 

[Chinese-Dragon]

9.2% growth for 2011 is not bad at all, much better than the current global economic climate would suggest.

 

[Smarterthanyou]

There is a growing pessimism about data coming out of china. For example china plays clever with their unemployment numbers.

Beijing issues an urban unemployment figure below 4.5 percent, but this includes only those officially recognized and no one, including officials at the Ministry of Human Resources and Social Security, believes it is accurate.

The state-controlled Chinese Academy of Social Sciences placed urban unemployment at 9.4 percent before the full impact of the financial crisis was felt. The PRC’s rural unemployment has long exceeded 20 percent.

True Chinese unemployment is certainly higher than true American unemployment, and, depending on how unemployment is measured, could be much higher.

So it begs the question- is there any integrity in these numbers coming out of china? About a year ago Chinese on these forums used to snicker and get belligerent when topics about a real estate crash was mentioned. They talked tough about it being a western prpoganda against them. Their govt propaganda arm had articles ridiculing the concept and now, look today it is all coming to fruition.

 

[oct605032048]

http://www.mitbbs.com/article2/Military/37046101_240.jpg

 

[below_freezing]

There is a growing pessimism about data coming out of china. For example china plays clever with their unemployment numbers.

Beijing issues an urban unemployment figure below 4.5 percent, but this includes only those officially recognized and no one, including officials at the Ministry of Human Resources and Social Security, believes it is accurate.

The state-controlled Chinese Academy of Social Sciences placed urban unemployment at 9.4 percent before the full impact of the financial crisis was felt. The PRC’s rural unemployment has long exceeded 20 percent.

True Chinese unemployment is certainly higher than true American unemployment, and, depending on how unemployment is measured, could be much higher.

So it begs the question- is there any integrity in these numbers coming out of china? About a year ago Chinese on these forums used to snicker and get belligerent when topics about a real estate crash was mentioned. They talked tough about it being a western prpoganda against them. Their govt propaganda arm had articles ridiculing the concept and now, look today it is all coming to fruition.

Many PhDs in economics and finance have already run through the numbers and corresponding indicies like electricity production, petroleum consumption and retail sales.

I'm not so sure about the numbers coming out of the US. We all know about heuristics and unemployment vs. nonparticipation in the labor force. The real question is not actually unemployment, as jobs and petroleum are both necessary in a CAPITALIST economy, but you do not necessarily need jobs in a SOCIALIST economy - you can just pay people to do nothing.

---------- Post added at 05:05 PM ---------- Previous post was at 05:03 PM ----------

US also excludes food and fuel inflation from their inflation statistics, and China doesn't. No one knows the true rate of inflation in the US.