Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Pre-Market Primer: China Is Officially Slowing Down

By

China's GDP growth in the past quarter was even slower than already-bearish forecasts. What will this mean for stocks and commodities?

PrintPRINT
Commodity and stock futures turned red today after China published disappointing economic data. GDP growth over last year's first quarter slowed from 8.9% to 8.1%, falling short of economists' estimates. Industrial production for March increased by 11.9% over March 2011, beating estimates. Retail sales last month remain strong at 15.2% over last year.

Let's put this in perspective: If the US or any European country grew by 8.1%, the only likely explanation would be that some number-cruncher forgot to carry a zero or something, probably because austerity measures ruined the state's green eyeshade budget. But the world economy has come to depend on fantastic growth in China. The commodities market, for example, is largely a massive bet on China. And so is Australia.

Oil prices, for example, are falling today on fears that China will become less power-hungry in the coming years. WTI futures in the US dropped 0.22% to $103.41/barrel this morning. Also weighing on oil prices is an announcement by Ali al-Naimi, Saudi Arabia's oil minister, that oil prices are too high and Saudi Arabia will work to bring prices down. Copper futures, also very sensitive to Chinese demand, dropped 1.32%.

The Chinese data, coupled with Spain's still-nightmarish borrowing costs, pushed US equity futures down. Dow (^DJI) futures declined 0.57% to 12,876.00. Futures on the S&P 500 (SPY) are down 0.58% to 1,377.80. The tech-heavy Nasdaq (^IXIC) futures fell 0.48% to 2,725.50.

Two bellwether companies reported better-than-expected earnings since the markets closed yesterday. Google (GOOG), one year into founder Larry Page's reign as CEO, delivered earnings of $10.08 per share, driven by growth in ad spending. This year, Google will account for about 16.5% of online display ads. Google is also proposing to split its stock in half, creating a new Class C of non-voting stock. This means that an investor that holds one share of Google worth $654.50 (as it is in the pre-market this morning, up 3.49%) will get one voting share and one non-voting share, both worth $327.25. This effectively dilutes the voting power of each investor. The measure will come up for a vote at the company's annual meeting.

JPMorgan Chase's (JPM) profit declined 3%, but still beat expectations. The bank made $5.4 billion, or $1.31 per share.

Inflation in the US, Germany, and Italy all fell right in line with expectations. The US Consumer Price Index slowed to a 0.3% increase in March, after rising 0.4% in February. Excluding food and energy, the price of living increased by 0.2%. CPI in Germany and Italy increased by 0.3% and 0.5%, respectively, in March. Italy's industrial production in February decreased by 0.7%.

Twitter: @vincent_trivett
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE