Aurelia Butler

Information made public on Wednesday showed that China’s total economic output, also known as gross domestic product (GDP), grew by 4.9% from July to September. This growth is higher than what was expected and is compared to the same time last year. Along with this, data showed a rise in spending and industrial activity in September. This suggests a slow and careful recovery, helped by recent policies. However, the growth rate in this third quarter was slower than the 6.3% growth seen in the second quarter.Citigroup has changed its prediction for China’s GDP growth in 2023 to 5.3%, up from its previous prediction of 5%. JP Morgan and Nomura now expect growth rates of 5.2% and 5.1% respectively. Goldman Sachs has slightly lowered its forecast to 5.3% from 5.4%, but this is still above the official goal set by Beijing, which is 5% growth for the year.Economists at JP Morgan, led by Haibin Zhu, are hopeful about the strong economic activity in September. They believe this trend will continue in the coming months. However, they also noted that weak GDP growth, which includes inflation, could slow down the recovery in private investment because of a difficult earnings and profit outlook.Economists at Morgan Stanley, led by Jenny Zheng, believe more economic support and changes are needed to prevent a possible cycle of debt and falling prices. Zheng suggested that since the 5% growth target seems reachable, policy measures could be saved for next year.In order to respond to slowing growth, Beijing has recently put in place several measures. These include increasing public works spending, reducing interest rates, easing property rules, and efforts to strengthen the private sector. However, worries about debt risks and a weak yuan have limited the government’s ability to boost growth.Morgan Stanley pointed out that the upcoming central economic work conference in December will give more policy direction. At the same time, JP Morgan predicts that China’s potential growth may decrease faster than originally thought in 2024 and 2025, dropping to a range of 4%-4.5% and 3.5%-4% respectively.Reuters contributed to this article.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

Goldman Sachs, however, cut its view to bring it more in line with the target set by its peers. All six brokerages listed below have pegged their estimates above Beijing’s 5% growth target for the year.Following are the forecasts from global brokerages: Brokerage Current 2023 GDP Growth Previous 2023 GDP Growth Forecast Forecast J.P.Morgan 5.20% 5% Nomura 5.10% 4.80% Citigroup (NYSE:C) 5.30% 5% Goldman Sachs 5.30% 5.40% UBS 5.2% 4.8% Morgan Stanley 5.1% 4.8%-4.9% More

SHANGHAI/BEIJING (Reuters) -China has lodged a stern rebuke of the United States over its latest chip curbs, China’s foreign ministry said on Wednesday, after the Biden administration published new measures to further restrict Beijing’s access to cutting-edge technologies.”Such restrictions and forced de-coupling for political purposes violate the principles of the market economy and fair competition,” the ministry said in a response to Reuters’ questions. The U.S. has said it does not want to block China’s economic development, and China hopes the U.S. will adhere to this rather than saying one thing and doing another, it said.Washington on Tuesday said it plans to halt shipments to China of more advanced artificial intelligence chips designed by Nvidia (NASDAQ:NVDA) and others. It also restricted a broader swathe of advanced chips and chipmaking tools to a greater number of countries including Iran and Russia, and blacklisted Chinese chip designers Moore Threads and Biren.China’s CSI Semiconductor Index dropped 1.4% on Wednesday following the announcement, while the STAR Chip Index lost 1.2%. An index tracking China’s artificial intelligence (AI) companies closed 1.8% lower, after hitting a nine-month low. AI stocks were further hit after the U.S. announced further controls on Nvidia chip exports to China, UBS wrote in a note to clients.Yang Wang, a senior analyst at Counterpoint, said he expected only limited disruption to the Chinese AI industry given that many had been bracing for the curbs and stockpiling chips. Still, the impact could be more material over the medium to longer term and could cause the gap between China and global peers in AI to grow in coming years, he added. Charlie Chai, analyst at 86Research, said the restrictions would likely further boost the self-sufficiency agenda being pushed by Chinese President Xi Jinping. While Nvidia will be unable to sell some AI chips to China, the new rules will also prevent cutting-edge technology from being used to manufacture chips designed by two of its most capable rivals, Biren and Moore Threads, well-funded Chinese startups founded by Nvidia veterans.Biren said on Tuesday that it was assessing the possible impact on the company and would appeal to the U.S. government to re-examine the decision. Moore Threads said it was communicating with all parties involved and evaluating the impact. More

(Reuters) -JP Morgan, Citigroup (NYSE:C) and Nomura on Wednesday lifted their forecast for China’s economic growth for the year following upbeat data, but highlighted the need for more stimulus. Data on Wednesday showed China’s gross domestic product (GDP) rose at a faster-than-expected 4.9% in July-September from a year earlier, and along with data showing a rise in consumption and industrial activity in September, suggested a tentative recovery thanks to a recent flurry of policy measures.Third-quarter growth was, however, slower than the 6.3% expansion in the second quarter.Citigroup now expects China’s GDP to grow 5.3% in 2023 from 5% earlier, while JP Morgan and Nomura see it at 5.2% and 5.1%, respectively. Goldman Sachs trimmed its forecast to 5.3% from 5.4%, still higher than Beijing’s official target of a 5% growth for the year. “Like August, September monthly activity came in stronger than expected. This is encouraging,” JP Morgan economists, led by Haibin Zhu, said. JP Morgan expects the economic momentum to persist in the coming months.MORE STIMULUS NEEDEDHowever, weak growth in nominal GDP – which includes inflation effects – suggests that the earnings and profit outlook will remain a hurdle in the path to the recovery in private investment, JP Morgan said.This points to the need to step up stimulus and reforms to “decisively fend off a debt-deflation loop,” economists at Morgan Stanley led by Jenny Zheng, said.Since the 5% growth target looks achievable, policy space could be saved for next year, Zheng said. Beijing has in recent weeks unveiled a raft of measures, including more public works spending, interest rate cuts, property easing and efforts to shore up the private sector, after growth momentum in the world’s second-largest economy dropped. The government’s ability to spur growth has been hamstrung by fears over debt risks and a fragile yuan.The next policy signpost to watch will be China’s central economic work conference in December, Morgan Stanley said. JP Morgan expects China’s potential growth coming down faster than initially expected in 2024 and 2025 to a range of 4%-4.5% and 3.5%-4%, respectively. More

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U.S. President Joe Biden flies to Israel on Wednesday in an attempt to soothe heightened tensions in the region after a missile strike on a Gaza hospital killed hundreds of Palestinians.Palestinian officials said an Israeli air strike hit the hospital, while Israel blamed the blast on a failed rocket launch by Palestinian militants. Both sides denied responsibility.The news has inflamed an already tense situation and resulted in a planned  summit between the U.S. president, Palestinian President Mahmoud Abbas and Egyptian President Abdel Fattah al-Sisi being cancelled.Biden will meet Israeli Prime Minister Benjamin Netanyahu and the Israeli war cabinet later Wednesday, but it’s debatable what he can achieve given the circumstances.Meanwhile, the United Nations Security Council is set to vote later Wednesday on a resolution that calls for humanitarian pauses in the conflict to allow humanitarian aid access to the Gaza Strip.U.S. stock futures traded with minor losses Wednesday, as investors digested more quarterly corporate earnings.At 05:00 ET (09:00 GMT), the Dow futures contract dropped 23 points or 0.1%, S&P 500 futures fell 7 points or 0.2%, and Nasdaq 100 futures dropped 40 points or 0.3%.The major indices traded in a muted fashion Tuesday, but corporate results have generally been impressive at this early stage of the third quarter earnings season.So far, 83% of companies have so far topped earnings expectations, while about 70% have surpassed sales estimates, according to FactSet data.Big tech companies take the earnings lead today [see below], but United Airlines (NASDAQ:UAL) will also be in the spotlight after the carrier issued disappointing fourth-quarter guidance after the close Tuesday, with higher fuel costs and the suspension of Tel Aviv flights expected to weigh.JB Hunt stock (NASDAQ:JBHT) also traded lower premarket after the transportation and logistics company fell slightly short on profit expectations in the third quarter. There are also fresh economic numbers to digest, in the form of housing starts and building permits data for September.The quarterly earnings continues in full flow Wednesday, with results from streaming giant Netflix (NASDAQ:NFLX), after the close, the day’s highlight.Netflix suffered a weak quarter last time out, but investors are hoping for better news as its efforts to restrict sharing of accounts could lead to a pick-up in subscriber growth. Netflix’s crackdown on password-sharing is expected to have boosted subscribers by about 6 million in the third quarter, and investors will be looking to see whether this sets the stage for price increases in an attempt to further increase revenue.Tesla (NASDAQ:TSLA) is also due to report after the close of trading, with the electric vehicle manufacturer having already disclosed its third-quarter vehicle delivery and production numbers, which drive the vast majority of the company’s revenue.Earlier this month, Tesla confirmed that it delivered just over 435,000 electric vehicles during the third quarter – not breaking a delivery record for the first time in a long time. Morgan Stanley (NYSE:MS) leads the way before the open, and the banking giant is likely to follow its peers in benefiting from rising net interest income, driven by higher interest rates and loan growth. China may have turned the corner, after data released earlier Wednesday showed that the Asian giant’s economy grew at a faster-than-expected pace in the third quarter from a year earlier.Gross domestic product grew 4.9% in July-September from the year earlier, a drop from the 6.3% expansion in the second quarter, but still considerably better than the expected 4.4% increase.On a quarter-by-quarter basis, GDP grew 1.3% in the third quarter, accelerating from a revised 0.5% in the prior quarter.Additionally, China’s industrial output in September grew 4.5% from a year earlier, matching the pace in August, and retail sales rose 5.5% in September, accelerating from a 4.6% increase the month earlier.The world’s second-biggest economy has started to show signs of stabilising, helped by a series of stimulus steps from Beijing, although a durable recovery could be hampered by the ongoing crisis in the country’s real estate sector.There has been no word of Country Garden (HK:2007), China’s biggest private property developer, paying a $15 million coupon due, fuelling expectations that it has defaulted on its offshore debt.Non-payment would trigger cross defaults in other Country Garden bonds, likely prompting one of China’s biggest corporate debt restructurings.Oil prices soared Wednesday after a deadly blast at a Gaza hospital heightened tensions in the Middle East, thwarting a U.S. diplomatic effort in the Israel-Hamas war.By 05:00 ET, the U.S. crude futures traded 2.6% higher at $87.66 a barrel, while the Brent contract climbed 2.5% to $92.11 a barrel. The explosion at the crowded hospital in Gaza, which was blamed on both Israeli and Hamas forces, has renewed concerns that a spillover of this conflict could disrupt crude supplies in the oil-rich region as a planned summit between U.S. President Joe Biden and Egyptian and Palestinian leaders was cancelled.The crude market had received a boost late Tuesday after data from the American Petroleum Institute indicated that U.S. inventories fell a hefty 4.4 million barrels in the week to October 13.This draw comes after a bumper build in the prior week, which also saw U.S. production reach new peaks, and diluted worries about a reduction in demand in the world’s largest consumer.Official data from the Energy Information Administration is due later in the session, for confirmation. 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