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European stocks slump as China growth fails to cheer traders

April 16, 2024


Passers-by and tourists stand on the banks of the Yangtze River in Chongqing, China. FTSE, European stocks

The FTSE fell despite gross domestic product expanding by 5.3% in China in the first three months of the year. (dpa, dpa picture alliance)

The FTSE 100 (^FTSE) and European stocks tumbled into the red on Tuesday despite news that the Chinese economy grew faster than expected in first quarter.

Gross domestic product (GDP) rose 5.3% in the country the first three months of the year, beating expectations that the world’s second largest economy would see growth slow to 4.6%.

It came as the Office for National Statistics (ONS) revealed that the rate of UK unemployment rose to 4.2% in the three months to February.

  • London’s benchmark index was 1.3% lower in early trade, with miners and banks among the fallers

  • Germany’s DAX (^GDAXI) dipped 1.4% and the CAC (^FCHI) in Paris also headed 1.4% into the red

  • The pan-European STOXX 600 (^STOXX) was down 1.3%

  • Wall Street is set to open lower as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in negative territory

  • UK unemployment rate jumps by more than expected

  • Superdry (SDRY.L) shares tumble 34% after launch of delisting turnaround plan

Continued concerns over tensions in the Middle East, along with worries over how soon central banks will start cutting interest rates, are dampening risk appetite among investors.

Victoria Scholar, head of investment at interactive investor, said: “Risk-off sentiment is gripping European markets today…as negative momentum from yesterday’s sell-off on Wall Street carries forward to this morning’s price action.

“The strength of the US dollar is proving problematic for risk appetite as hopes fade of a near-term rate cut stateside. San Francisco Fed President Mary Daly said there’s ‘no urgency’ to cut US interest rates.

“There are also worries about rising geopolitical tensions in the Middle East with concerns about how Israel plans to respond to Iran’s attack over the weekend.”

Follow along for live updates throughout the day:

Live7 updates

  • Superdry slumps amid plans to delist from London Stock Exchange

    Superdry branch of the British clothing chain SuperdSuperdry branch of the British clothing chain Superd

    Superdry branch of the British clothing chain Superd (Guido Schiefer)

    Superdry shares (SDRY.L) fell out of fashion with investors, slumping more than 34%, as it announced it plans to delist from the London Stock Exchange.

    The beleaguered chain said it would be forced to enter into administration if it did not go ahead with the move.

    It is looking to raise up to £10m through an equity raise that would take the firm private.

  • Long-term sickness hits record high

    Delving back into the ONS data from this morning, the number of people out of work due to long-term sickness has hit a fresh high.

    The figures show that there were 9.4 million people economically inactive in the three months to February — the highest since 2012.

    Of those, 2.83 million said long-term sickness is the reason they are out of work.

  • Oil rises as Israel looks to respond to Iran attack

    Brent crude oil rose towards $91 a barrel this morning, before paring back some gains, after Israel said it would be forced to respond to Iran’s attack that took place over the weekend.

    It comes despite Europe and the US urging restraint after deeming Tehran’s attack on Saturday a “failure”.

    Israeli military officials said their country had no choice but to respond to Tehran’s barrage of more than 300 missiles.

    Warren Patterson, head of commodities strategy for ING, said the possibility of a direct response from Israel “means that this uncertainty and tension will linger for quite some time”.

    “The more escalation we see, the more likely we are to see oil supply from the region impacted.”

  • Hunt on UK jobs data

    London, United Kingdom. March 13 2024. Chancellor Jeremy Hunt is seen outside 11 Downing Street..Credit: Tayfun Salci / Alamy Live NewsLondon, United Kingdom. March 13 2024. Chancellor Jeremy Hunt is seen outside 11 Downing Street..Credit: Tayfun Salci / Alamy Live News

    London, United Kingdom. March 13 2024. Chancellor Jeremy Hunt is seen outside 11 Downing Street..Credit: Tayfun Salci / Alamy Live News (Tayfun Salci)

    Chancellor Jeremy Hunt has focused on the boost to workers’ pockets from rising real wages.

    He said: “It’s great that real wages have now risen for nine months in a row, and, together with our national insurance cuts worth £900 to the average worker, people should start to feel the difference.”

    However, acting shadow work and pensions secretary Alison McGovern took aim at the British government.

    She said: “Tory failure is laid bare by the reality that we are now the only country in the G7 with an employment rate stuck below pre-pandemic levels.”

  • Asia and US stocks slump

    Asian shares slipped into the red overnight, following a slump on Wall Street as higher yields in the US bond market pressured stocks.

    The Nikkei (^N225) slumped 1.9% on the day in Japan, as the dollar continued to gain against the yen, hitting fresh 34-year highs.

    Meanwhile the Hang Seng (^HSI) fell 2.1% in Hong Kong, and the Shanghai Composite (000001.SS) was 1.7% down by the end of the session.

    It came despite the Chinese economy growing at a faster-than-forecast annual rate of 5.3% in the first quarter of the year. In quarterly terms it expanded by 1.6%

    China’s National Bureau of Statistics said:

    Generally speaking, in the first quarter, the national economy made a good start with positive factors amassing, laying a strong foundation for achieving the annual development targets.

    However, we should be aware that the external environment is becoming more complex, severe and uncertain, and the foundation for stable and sound economic growth is not solid yet.

    Across the pond, Wall Street closed sharply lower as simmering tensions in the Middle East curbed investor risk appetite.

    The three major US stock indexes reversed initial gains to extend Friday’s sell-off. The Dow Jones (^DJI) fell 0.7% to 37,735.11, the S&P 500 (^GSPC) lost 1.2%, to 5,061.82, and the tech-heavy Nasdaq (^IXIC) was down 1.8%, ending at 15,885.02.

  • UK unemployment climbs to 4.2%

    The UK unemployment rate has risen to an estimated 4.2% in the three months to February, the Office for National Statistics (ONS) revealed on Tuesday.

    There are now around 850,000 additional working-age people out of work, who are no longer seeking work or are unable to start work, than before the pandemic began.

    The unemployment-to-vacancies ratio, a key measure for the Bank of England, ticked up to 1.6 as unemployment increased and vacancies fell further.

    Meanwhile, pay growth was still stubbornly high — at 6% — but continues to fall to more reasonable levels.

    Liz McKeown, ONS director of economic statistics, said:

    “Recent trends of falling vacancy numbers and slowing earnings growth have continued this month, albeit at a reduced pace.

    “At the same time, we are now seeing tentative signs that the jobs market is beginning to cool, with both a fall in the headline employment rate from our survey and a drop in the total number of people on payrolls from HMRC data.”

  • Coming up…

    Good morning, and welcome back to our live markets blog. Follow along to stay updated with what’s moving markets and happening across the global economy.

    Here’s a quick look at what’s on the agenda for today:

    • 7am: Trading updates: Dr Martens, Petra Diamonds, Qinetiq

    • 7am: UK unemployment report

    • 10am: ZEW index of eurozone economic sentiment

    • 10.15am: Treasury Committee hearing with Clare Lombardelli, deputy governor at the Bank of England

    • 1.30pm: US building permits and housing starts data for March

    • 2pm: IMF latest World Economic Outlook

    • 3.15pm: IMF latest Global Financial Stability Report

Watch: What is a recession and how do we spot one?

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