5 March 2024
If you are covering the latest news in financial markets, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“With China’s annual National People’s Congress convening this week in Beijing, markets looked for signs of stimulus in the opening speeches that could signal a shift in sentiment towards this part of the global economy. While the announced target of 5% GDP growth was largely in line with expectations, this is still ambitious given the negative overhang from the real estate sector and weak domestic demand. However, it is clear there is no replacement for the big infrastructure packages historically used to support growth in a country where priorities have shifted to favour the more sustainable trajectory of a future consumer-led economy, alongside heavy investment in the military and technological development. Domestic consumerism is a potentially powerful source of demand for an economy where 600 million people earn just RMB1000 ($139) per month, according to a 2020 statement by then-Premier Li Keqiang, but clearly the path to achieving this is going to be a long and bumpy one.
“British Retail Consortium retail sales data today reported weak February spending despite it being the warmest February on record, but also one of the wettest. Sales rose just 1.1%, dipping below the three-month average of 1.4%, with non-food sales seeing particular weakness - down 2.5% year on year over the three-months to February. While there have been signs of improving consumer confidence in previous months, recent data saw that trend reversed in February. With expectations for multiple interest rate cuts by the Bank of England in 2024 having faded in recent weeks, together with the more muted expectations for tax cuts in tomorrow’s spring budget, consumers are for now keeping wallets firmly closed as they await signs of clearer skies ahead.”
