World stocks cheer Chinese growth target
AMSTERDAM — World stock markets rose Tuesday as investors applauded China’s pledge to stick to growth targets for its economy, the world’s second largest.
At the ruling Communist Party’s annual congress, outgoing Premier Wen Jiabao said the government would spend what it needs to meet the economic growth target of 7.5 percent enshrined in the latest five-year development plan.
“Asian stocks are very much on the front foot, buoyed by expectations of continuing (easy central bank monetary policies) around the globe and China maintaining its economic growth target for the year,” said analysts from Charles Stanley in a note on markets.
European markets, including bond prices, were also buoyed by a sharp rise in eurozone retail sales. They grew 1.2 percent in January from the previous month, far above the 0.2 percent investors were expecting. Economists said the gain was likely fueled by post-holiday discounts and warned consumer spending is unlikely to remain that strong in coming months.
By late morning in Europe, Germany’s DAX was up 1.6 percent to 7,816.67 while France’s CAC-40 was 1.4 percent higher at 3,760.28. Britain’s FTSE 100 rose 0.7 percent to 6,389.41.
Wall Street was poised to open higher, with Dow Jones industrial futures rising 0.3 percent to 14153 and S&P 500 futures advancing 0.2 percent to1529.
Earlier in Asia, Hong Kong’s Hang Seng rose 0.1 percent to 22,560.50. The mainland’s Shanghai Composite Index jumped 2.3 percent to 2,326.31 and the Shenzhen Composite Index added 2.3 percent to 964.68 after Wen’s pledge to support growth.
In his speech, Wen mentioned subsidies for agriculture and energy conservation. He also pledged to relax the credit supply, analysts said.
“I think that is good news for the banks. Either they will increase their quota for new loans or reduce the deposit reserve ratio. So that means boosting the money supply to support economic growth,” said Francis Lun, managing director of Lyncean Holdings in Hong Kong.
Lun also said he believes China’s leaders are aiming for something higher than the 7.5 percent growth target announced at the congress.
Stocks in Tokyo rose on hopes that the Bank of Japan, which begins a two-day meeting on Wednesday, might demonstrate a shift in monetary policy to conform to the program championed by new Prime Minister Shinzo Abe. The Nikkei 225 index advanced 0.3 percent to 11,683.45, its highest close since September 2008.
Australia’s S&P/ASX 200 gained 1.3 percent to 5,075.40 amid bargain-hunting after a sharp sell-off the day before.
Looking ahead, investors will keep an eye on budget negotiations in Washington. President Barack Obama and his political opponents have failed so far to agree on a way to roll back automatic spending cuts that took effect Friday. Those cuts slash $85 billion from the nation’s budget, which is expected to be a drag on the economy.
In commodity markets, the benchmark oil contract for April delivery was up 38 cents or 0.4 percent to $90.45 per barrel in electronic trading on the New York Mercantile Exchange.
In currencies, the dollar was weaker as the euro rose to $1.3043 from $1.3022 late Monday in New York. The dollar also fell against the Japanese yen, to 93.15 yen from 93.42 yen.