Jornal Do Brasilia - Stocks rise, dollar drops as China posts bumper growth

The blockbuster 4.5-percent expansion, helped by above-forecast retail sales last month, revived optimism for an economic recovery in the world's second biggest economy after its worst performance in decades seen in 2022.

The figures are the first snapshot since 2019 of a Chinese economy unencumbered by public health restrictions that included city-wide lockdowns lasting months.

Below-forecast readings on industrial output and fixed asset investment suggested weaknesses remained in the economy and the recovery could be uneven.

"We expect to see higher GDP growth rate in upcoming quarters as a result of the low base from last year, and the annual growth target of five percent should be achievable," said Chaoping Zhu, at JP Morgan Asset Management.

"That said, some challenges still exist in the economy."

The Chinese economy remains beset by a series of problems including a debt-laden property sector, global inflation and the threat of recession elsewhere.

"It's not just the pandemic that the country is bouncing back from, confidence in the property market has been severely undermined and it will take time to recover," noted Craig Erlam, senior analyst at OANDA trading group.

Investors also continue to fret over Federal Reserve plans to hike interest rates as officials try to rein in US inflation, with top policymakers seeming to be split over how many more increases are needed.

- Focus on earnings -

Wall Street's three main indexes ended slightly higher Monday in muted trade as investors there awaited the release of fresh earnings following broadly positive results from banking giants including JPMorgan and Citigroup.

A surprise jump in a closely watched index tracking New York state manufacturing added to the buying sentiment, while the VIX Index of market volatility dipped below 17 to its lowest since the start of last year.

"The subtle yet positive data beat goes on after last week's highlight reel was almost uniformly hopeful, including progress on inflation, better growth than expected, the possibility of fewer rate hikes, and some constructive big bank earnings," said SPI Asset Management's Stephen Innes.

Focus turns to the release of fresh earnings this week from big-ticket names including Bank of America, Morgan Stanley, Johnson & Johnson, Netflix, Tesla, Ericsson and Nokia.

However, traders will still be nervously watching the reports from the financial sector following last month's banking turmoil that saw three regional US lenders go under and Credit Suisse taken over.

"The focus on the hundreds of regional banks reporting in coming days will be firmly on the extent of deposit outflows relative to street expectations," said Ray Attrill at National Australia Bank.

- Key figures around 1045 GMT -

London - FTSE 100: UP 0.3 percent at 7,899.35 points

Frankfurt - DAX: UP 0.5 percent at 15,875.43

Paris - CAC 40: UP 0.6 percent at 7,540.00

EURO STOXX 50: UP 0.7 percent at 4,397.16

Tokyo - Nikkei 225: UP 0.5 percent at 28,658.83 (close)

Hong Kong - Hang Seng Index: DOWN 0.6 percent at 20,650.51 (close)

Shanghai - Composite: UP 0.2 percent at 3,393.33 (close)

New York - Dow: UP 0.3 percent at 33,987.18 (close)

Euro/dollar: UP at $1.0977 from $1.0930 on Monday

Pound/dollar: UP at $1.2437 from $1.2376

Dollar/yen: DOWN at 134.04 yen from 134.46 yen

Euro/pound: DOWN at 88.26 pence from 88.29 pence

West Texas Intermediate: DOWN 0.2 percent at $80.68 per barrel

Brent North Sea crude: FLAT at $84.74 per barrel

P. Duarte--JDB