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In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.
Chinese stocks fall on modest growth targets, whilst Hong Kong shares display a slight improvement.
China stocks fell after Beijing introduced a new modest economic growth target of 5% for 2023, undercutting expectations of a big economic push, whilst Hong Kong shares rose slightly in the light of this recent news.
China’s blue-chip CSI 300 closed down 0.5%, while the Shanghai Composite Index lost 0.2%.
Hong Kong’s Hang Seng Index was up 0.2%, and the China Enterprises Index was little changed.
China has recently announced a modest target for economic growth this year of around 5%, as it looks to kickstart the annual session of its National People’s Congress (NPC), which is set to implement the biggest government shake-up in over a decade of national politics.
This latest shakeup of the economic leadership’s focus in 2023 can help to provide investors further clues on the economic outlook of the Chinese economy as it looks to rebound from a disappointing start to the fiscal year.
Further economic information was provided on Chinese stocks with the performance of The CSI Defence index, which gained 1.2% after China said it will look to further boost defence spending by 7.2% across 2023.
The CSI Telecom index rose 1.2%, while the Coal index and Energy index dropped 2.4% and 1.3%, respectively.
A similar trend was also seen in the Hong Kong market, with the Hang Seng Telecom index up 3.0%, while shares of mainland properties down 0.7%.
Tech giants in Hong Kong declined 0.8%, with Tencent down 1.3% and Alibaba losing 0.9%.
Euro zone inflation softens to 8.5% in February as the ECB signals interest rate hiking is set to continue for the foreseeable future.
New data fresh out of the euro zone on Thursday suggested that inflation is taking a while to come down significantly, further raising prospects of new rate hikes in the coming months.
Headline inflation figures across the 20-member bloc came in at 8.5% in February, according to preliminary data released which hinted towards further interest rate increases as the measures to combat inflation are continued.
Further indication that prices are not coming down at the pace that had been registered in recent months could be seen with the headline inflation standing as high as 10.6% in October, but this number reached a revised 8.6% in January as disappointment continued.
Analysts were expecting a lower February inflation rate of 8.2%. But this figure has been offset with food prices increasing month-on-month which contrasted against the declines in energy costs across the economic bloc.
On top of a small drop in headline inflation, the core figure picked up to an estimated value of 5.6% in February, from 5.3% in January, a small but very noticeable increase.
When combined, this latest batch of economic data further fuels continued discussions that the European Central Bank could keep its firm stance for longer as the dogged approach to tackling inflation looks set to continue over the upcoming months.
The world’s biggest shipping company places its hopes on a rebound for the global economy as world trade continues to return to pre-pandemic levels.
MSC, Mediterranean Shipping Company, the world’s largest ocean freight line, is placing its hopes in more positive signals for the global economy for trade demand, but it will be months before a rebound takes hold.
Over the past several quarters, a large global demand drop and significant supply chain disruptions have influenced the global supply chain and subsequent economic impact has therefore been noticeable.
The Switzerland-based shipping firm, which is widely seen as a barometer for global trade, has a 17.5% market share in container traffic globally and is a key player in the supply chain markets.
Ocean freight bookings are very much dependent on manufacturing orders. U.S. retailers had pulled back manufacturing orders by as much as 40% due to consumer softening and warehouse inventories at historic levels over the course of 2022, which resulted in a drastic drop in shipping levels internationally.
The lack of warehouse capacity is also driving rates to all-time highs, in the form of inflationary pressure that is passed onto the consumer, which is seen in rising inflation rates globally.
Ocean freight rates, which were the largest inflationary pressure on products, have dropped sharply back to pre-pandemic levels.
The combination of the weaker demand and lower prices has led ocean carriers to cancel sailings and by restricting the amount of sailings, shippers shrink the amount of available vessel capacity to put on a container, resulting in further bottlenecks to global trade.
Rejections for ocean freight have also increased, which means containers filled with product for the current or upcoming season are delayed.
This has led to logistics managers speculating that this will create a bottleneck in their supply chain, which could lead to further negative economic impact over the coming months.
