LONDON — Relief over China's economic growth rate helped shore up the mood in financial markets Monday ahead of a raft of U.S. corporate earnings and retail sales figures.
The world's second-largest economy grew 7.5 percent from a year earlier in the second quarter. Though the figure is down on the previous quarter's 7.7 percent, there had been fears that it may have fallen below 7 percent in the wake of efforts by the country's monetary authorities to clamp down on risky lending. A sharp drop would hurt companies around the world that have become increasingly reliant on breakneck Chinese growth to boost earnings.
"China's growth rate might still be on a steadily declining path, but investors were happy enough to see it come in line with expectations, growing by 7.5 percent in the second quarter," said Chris Beauchamp, market analyst at IG. "Beijing was keen to emphasise that internal consumption was picking up the slack, and helpfully retail sales rose strongly during June."
Combined with an easing in tensions over Europe's financial crisis and diminishing fears about the Federal Reserve's plans to rein in its monetary stimulus, the figures bode well for markets.
"We could be in for a week of quiet, steady gains for stock markets," he said.
Following a 1 percent rise in the Shanghai Composite Index to 2,059.39, European stock markets have posted solid gains. The FTSE 100 index of leading British shares was up 0.3 percent at 6,565, while Germany's DAX rose 0.1 percent to 8,225. The CAC-40 in France was 0.4 percent higher at 3,872.
Wall Street was poised for a solid opening with Dow futures and the broader S&P 500 futures up 0.2 percent.
How they open could hinge on a run of earnings, notably from Citigroup. June retail sales figures will also be closely monitored an hour before the bell on how they affect the debate over when the Fed will start 'tapering' its monetary stimulus. The median expectation in the markets is that they rose around 0.8 percent during the month.
"Today's retail sales data for June could well feed into the tapering debate if we get an improvement in line with recent consumer confidence numbers which have been much better than expected," said Michael Hewson, senior market analyst at CMC Markets.
For weeks now, the Fed's monetary stance has been the main driver in markets. The Dow and the S&P 500 struck all-time highs last week partly on an indication from the Fed that the monetary stimulus may be in place for longer than expected. At the moment, the Fed is buying around $85 billion of assets in the markets, and that's helped prop up stocks for months.
The dollar has faltered in recent days as expectations of a Fed tightening have eased. It clawed back some ground Monday, with the euro 0.3 percent lower at $1.3033. The dollar was 0.5 percent higher at 98.81 yen.
Earlier in Asia, Hong Kong's Hang Seng added 0.1 percent to 21,303.31 and Sydney's S&P/ASX 200 gained 0.1 percent to 4,981.10. South Korea's Kospi rose 0.3 percent 1,875.16. Japan's financial markets were closed for a public holiday.
Oil prices gave up some recent gains. Benchmark crude for August delivery was down 33 cents at $105.62 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained $1.04 to $105.95 in New York on Friday, driven higher by continuing tensions in Egypt and a sharp drop in U.S. crude stockpiles.
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