European Shares Set To Fall As China GDP Data Shows Patchy Recovery

(RTTNews) - European stocks are likely to open on a subdued note Wednesday after China posted sluggish GDP growth in 2023.

China's GDP grew by 5.2 percent in 2023, hitting the government's official target, but concerns about growth momentum remain due to problems dogging the property market, mounting deflationary pressures and increased tensions with the United States.

December activity indicators painted a mixed picture, with factory output growth accelerating at the fastest pace since Feb 2022, while retail sales grew at the slowest pace since September and investment growth remained tepid.

Speaking at the World Economic Forum in the Swiss resort of Davos, Chinese premier Li Qiang said China had "good and solid fundamentals in its long-term development" and that Beijing would "adhere to its basic national policy of opening up to the outside world".

Asian markets traded mostly lower as investors reacted to mixed Chinese data and hawkish rhetoric from central bank officials at the Davos World Economic Forum meeting 2024.

U.S. Treasuries held steady while the dollar gained ahead of the release of U.S. retail sales and industrial production data, expected to offer more cues on the world's largest economy.

Gold extended losses after a decline on Tuesday of more than 1 percent.

Oil traded lower as a stronger dollar and broader risk-off sentiment in financial markets offset concerns the Israel-Hamas war may spread beyond Gaza.

The U.S. military has carried out a new strike in Yemen, targeting four anti-ship missiles in the latest military action against the Iran-backed Houthi rebels.

Elsewhere, Iran launched missile strikes in Iraq, Syria and Pakistan, citing security threats.

The day's European economic calendar remains light, with consumer and producer price data from the U.K. awaited.

U.S. stocks fell notably overnight, with a lackluster start to the earnings season and concerns that the Federal Reserve may not cut interest rates anytime soon weighing on sentiment.

U.S. 10-year yields topped 4 percent after Federal Reserve Governor Christopher Waller indicated in a speech that inflation is nearing its target, but the timing and rate cuts will depend on incoming data.

On the macro front, the New York Empire State manufacturing index reported a significant drop to -43.7 in January, the lowest reading since May 2020.

The Dow shed 0.6 percent, the S&P 500 slipped 0.4 percent and the tech-heavy Nasdaq Composite dipped 0.2 percent.

European stocks closed lower on Tuesday as ECB officials downplayed the idea of early rate cuts.

On the data front, reports showed German inflation rose in December while growth in British wages slowed in the three months through November.

The pan European STOXX 600 slipped 0.2 percent. The German DAX eased 0.3 percent, France's CAC 40 edged down 0.2 percent and the U.K.'s FTSE 100 dropped half a percent.