UKX FTSE 100 Index

By Paul J. Davies 

Stronger Chinese growth data lifted Asian stocks on Wednesday, although European indexes were down marginally, suggesting that investors were taking a pause after several days of rising prices.

U.S. markets were priced to open higher again, however, with futures for both the Dow Jones Industrial Average and the S&P 500 up 0.1%.

The Shanghai A-Share index in China and the Nikkei 225 in Japan were both up around 0.25% on Wednesday after data showed first quarter Chinese gross domestic product was better than expected, with growth of 6.4% year-over-year, boosted by very strong industrial production and much better retail sales.

The news led economists at Citigroup to lift their full-year forecast for China's GDP growth to 6.6%, saying that they now expected a U.S.-China trade deal and greater domestic policy effectiveness in China boosting demand.

"Our new baseline scenario is that a framework trade deal between the U.S. and China will be reached in [the second quarter] and it will lift most, if not all, existing punitive tariffs," they wrote. "The government's repeated messages to support private entrepreneurship and carry on market-oriented reforms have greatly reduced the policy uncertainty in China."

In Europe, the Stoxx 600 index opened 0.1% lower after having hit its highest closing level in 2019 on Tuesday. The FTSE 100, which had also closed at a 2019 record, also slipped 0.1% at the open. As with American stocks, the recent European rally has been a bloodless one with relatively weak trading volumes, especially this week ahead of the Easter holiday.

But evidence of an appetite for risk was visible in rising government bond yields. The U.S. 10-year Treasury rose on Wednesday to 2.608%, from 2.592% on Tuesday afternoon. The German 10-year bund yield also climbed, to 0.096% from 0.069%.

Both have now retraced almost all of their moves since a rush into safe assets in late March lifted prices and pushed down yields.

The 10-year German yield, which turned negative in late March and early April, is now at its highest since March 6. In the U.S., the yield gap between three-month and 10-year Treasurys, which also turned negative in late March, is now at its widest since March 11.

Another haven, gold, hit its lowest price since the depths of the stock market selloff in late December on Tuesday, but on Wednesday the precious metal was trading up 0.3% again at $1,280.30, which is still its lowest since a one-day dip in late January.

Brent crude oil was up 0.46% at $72.04. The WSJ Dollar Index, which measures the dollar against a basket of currencies, was down 0.2%.

Write to Paul J. Davies at paul.davies@wsj.com

(END) Dow Jones Newswires

April 17, 2019 04:19 ET (08:19 GMT)

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