Chinese Growth Curve Takes A Downward Turn

Chinese Growth Curve Takes A Downward Turn

China factory activity has shrunk for the first time in September since the initial corona virus outbreak in February 2020

The US headline benchmark indices Dow Jones, S and P 500 and Nasdaq ended the fortnight in the red territory, losing 0.75 per cent, 1.71 per cent and 3.17 per cent, respectively. The 10-year US Treasury yield continued its upward trajectory during the fortnight and touched 1.567 per cent, almost reaching its three-month highs. The yield has recorded a low of 1.13 per cent in August, but has since witnessed a dramatic reversal after the Federal Reserve recently signalled that they would soon taper the ongoing USD 120 billion monthly bond purchases.
 

Federal Reserve Chair Jerome Powell has told the Senate Banking Committee that inflation could persist longer than expected due to supply chain issues and reopening pressures. This could also be seen as a reason for turmoil in the US’ equity markets. The US’ consumer confidence fell to a seven-month low of 109.3 in September from 115.2 in August as sustained rise in virus cases has deepened concerns about the economy’s near-term prospects.

London’s FTSE 100 index gained 0.91 per cent during the fortnight to end at 7,027.07. Despite the lasting impact of the pandemic, total dividend payments from FTSE 100 companies are expected to climb close to their highest-ever level this year. According to calculations by A J Bell, FTSE 100 companies are expected to pay out Sterling Pound 84.1 billion in dividends this year after estimates for the fourth quarter of the year were upgraded by analysts. This total would represent a 36 per cent increase from the Sterling Pound 61.8 billion disbursed the previous year.

"The 10-year US Treasury yield continued its upward trajectory during the fortnight and touched 1.567 per cent, almost reaching its three-month highs."

Hang Seng and Shanghai indices also shrunk by 1.38 per cent and 1.27 per cent, respectively. China is currently facing a grave power crunch as a result of tight coal supplies and toughening emissions standards that has impaired production in diverse industries across several regions and poses a major risk to the already fatigued global supply chain. China factory activity has shrunk for the first time in September since the initial corona virus outbreak in February 2020. Goldman Sachs has recently cut China’s growth forecast to 7.8 per cent from the earlier 8.2 per cent.

It estimates that approximately 44 per cent of the country’s industrial activity has been affected. The Kospi index corrected 3.86 per cent during the fortnight to end at 3,019.18. South Korea’s stock prices declined by 6.91 per cent on a sequential basis in the third quarter ended September 30, 2021 primarily due to uncertainty over sooner-than-expected tapering of asset purchases by the US. The index marked the first quarterly decline since the outbreak of the pandemic. The OMX Copenhagen 20 plunged by a massive 5.04 per cent over the fortnight.

 

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