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Global stocks edge lower after China cuts growth target | |
(about 3 hours later) | |
BEIJING — Global stocks were mixed Monday after Beijing cut its growth target for its cooling economy and promised more market-opening reforms. | |
KEEPING SCORE: In early trading, Germany’s DAX fell 0.8 percent to 9,747.11 points and France’s CAC-40 lost 0.4 percent to 4,438.60. Britain’s FTSE 100 lost 0.5 percent to 6,170.38. On Friday, the DAX gained 0.7 percent and the CAC-40 rose 0.9 percent. Wall Street looked set for losses, with futures for the Dow Jones industrial average and Standard & Poor’s 500 index off 0.2 percent. | |
CHINESE GROWTH CUT: In a weekend speech to China’s legislature, Premier Li Keqiang lowered Beijing’s official growth target to 6.5 to 7 percent from last year’s “about 7 percent” and promised more market-opening reforms. The ruling Communist Party is striving for more self-sustaining growth based on domestic consumption to reduce reliance on trade and investment. But the slowdown is rattling markets and unnerving China’s trading partners as it dampens demand for industrial components and raw materials. Li promised to open oil, power, telecoms and other state-dominated industries to private competitors, but did not say if foreign companies would be allowed in. To stimulate slowing growth, Li said the government will boost deficit spending. | |
ANALYST’S TAKE: “Instead of a specific target, setting a growth range reflects the (Chinese) government’s desire for policymaking flexibility as they push for longer-term economic reforms,” DBS Bank economists said in a report. They noted Li also abandoned Beijing’s target for trade growth after exports fell far short of last year’s official goal. “Amid a weak global outlook, China may also be wary of setting an ambitious trade forecast on concerns it might raise expectations that Beijing would boost exports via yuan depreciation.” | ANALYST’S TAKE: “Instead of a specific target, setting a growth range reflects the (Chinese) government’s desire for policymaking flexibility as they push for longer-term economic reforms,” DBS Bank economists said in a report. They noted Li also abandoned Beijing’s target for trade growth after exports fell far short of last year’s official goal. “Amid a weak global outlook, China may also be wary of setting an ambitious trade forecast on concerns it might raise expectations that Beijing would boost exports via yuan depreciation.” |
ASIA’S DAY: The Shanghai Composite Index rose 0.8 percent to 2,697.34 and Sydney’s S&P ASX 200 gained 1 percent to 5,142.80. Seoul’s Kospi advanced 0.1 percent and Bangkok and Taiwan also rose. Tokyo’s Nikkei retreated 0.6 percent to 6,911.32 and Hong Kong’s Hang Seng shed 0.1 percent to 20,159.72. Benchmarks in Singapore, Jakarta and Manila also declined. Indian markets were closed for a holiday. | |
ENERGY: Benchmark U.S. crude gained 41 cents to $36.33 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $1.35 on Friday to close at $35.92. Brent crude, used to price international oils, added 58 cents to $39.30 per barrel. On Friday, it gained $1.65 to $38.72. | |
CURRENCY: The dollar declined to 113.57 yen from Friday’s 113.71 yen. The euro edged down to $1.0957 from $1.1000. | |
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. | Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. |