China GDP surprised to the upside in Q4

China’s economy grew faster than expected in Q4 2022, flat q/q and up 2.9% y/y. The median forecast had been for 1.6% y/y growth in Q4.  For the full year, China’s GDP grew 3.0%, higher than the 2.7% forecast. Industrial production growth slowed to 1.3% y/y in December as Covid-19 swept across the country, but the slowdown was not as severe as expected.  Retail sales declined by -1.8% y/y in December against forecasts of a -9.0% contraction.  The government is targeting 5% growth this year, and policy measures will aim to boost consumption and investment to achieve that goal.

Saudi Arabia’s Public Investment Fund and mining company Ma’aden have set up a joint venture with USD 50bn to invest in mining assets globally. The company has yet to be incorporated but will be controlled by Ma’aden with a 51% stake. The new company will invest in iron ore, copper, nickel and lithium to secure supply of these metals to the kingdom.

Real estate agency Betterhomes reported that Russians were the biggest non-resident buyers of property in Dubai in 2022, followed by the UK, India, Italy and France. Among those already resident in Dubai, Indian nationals were the biggest real estate buyers in Dubai last year, followed by British nationals and Russians.  

Today’s key economic data and events

• 08:30 Japan Tertiary industry Index (Nov) forecast 0.1% m/m
• 11:00 UK ILO unemployment rate (3m/3m) forecast 3.7%
• 11:00 Germany CPI (Dec final) forecast 8.6% y/y
• 14:00 Germany ZEW survey expectations (Jan) -15.0
• 17:30 US Empire manufacturing (Jan) forecast -8.6

Fixed Income

• US markets were closed at the start of the week for a public holiday. US 10yr futures are down slightly in early trade today. European bonds closed relatively unchanged with some moderate intra-day moves. Yields on 10yr bunds settled at 2.168%, up less than 1bps. Gilt yields rose almost 2bps to 3.38%.
• Emerging market bonds closed weaker nearly across the board with South African 10yr yields up 10bps to 10.434% and Turkey 10yrs adding 1bps to 10.02%. Indian 10yr bonds also moved lower with yields settling at 7.328%, up 3bps.

FX

• Currency markets started the overnight session with a softer US dollar bias but then faded that over the course of the day to close relatively unchanged. With no material catalyst, the dollar is likely waiting until central bank action later this week from Japan for a clearer near-term trajectory. EURUSD closed at 1.0822, down less than 0.1% while GBPUSD dropped 0.3% to 1.2194. USDJPY added 0.6% to close at 128.58.
• Commodity currencies settled mixed with USDCAD up slightly at 1.3408 and AUDUSD dropping by 0.2% to 0.6955 while NZDUSD managed to creep up marginally to 0.6381.

Equities

• US markets were closed yesterday and there was little in the way of firm direction from the other major global equity indices to start the week. What movement there was was broadly positive, with the composite STOXX 600 in Europe adding 0.5%. The FTSE 100 gained 0.2% and the DAX and the CAC 0.3%.
• Indian markets have been on the back foot so far this year after being some of the strongest performing indices in 2022. The Sensex lost a further 0.3% yesterday and is down 1.2% ytd.
• Locally, the DFM added 0.4% and the ADX 0.5%. Saudi Arabia’s Tadawul ended the day flat while Egypt’s EGX 30 gained a further 1.8% and is up 8.5% already ytd, in local currency terms.

Commodities

• Oil futures had a mixed result to start the week. Brent futures fell 1% to USD 84.46/b while WTI added 1.9% to USD 79.86/b. The better than expected China GDP print for the final quarter of last year may help to set up a further bullish case for Q1 that China can bounce back through its Covid wave relatively quickly.

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