(Alliance News) - China's annual gross domestic product growth promisingly topped forecasts, but analysts on Monday noted that data for the month of December was not as resounding, with retail sales coming short of lofty expectations.
China's economy grew at the slowest pace in more than four decades last year despite an impressive rebound after the country's novel coronavirus outbreak, official data showed Monday, though growth beat expectations.
The 2.3% expansion recorded for 2020 is the lowest figure since the Chinese economy embarked on major reforms in the 1970s. The figure was a marked slowdown from 2019 growth of 6.1% – itself already the lowest in decades – with the country hit by weak domestic demand and trade tensions with the US.
But the 2020 result was better than that forecast by an AFP poll of analysts from 13 financial institutions, who predicted a 2.0% expansion.
In the fourth quarter alone, GDP grew 6.5%, topping expectations of 6.1% growth.
"The Chinese economy avoided recession in 2020 and continued to grow strongly in 4Q20. This upbeat growth trend should continue in 2021. Control of people-flows has started, so the risk of a widespread outbreak of Covid should be small," ING Economics Chief Economist for Greater China Iris Pang said.
"When China can achieve a complete recovery is still an open question, even though GDP growth was positive for the year. Some GDP growth came from fiscal and monetary stimulus, and without those stimuli, the economy would not have recovered at such a pace since external demand has been very weak."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.3% at 6,713.14
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Hang Seng: up 1.0% at 28,858.94
Nikkei 225: closed down 1.0% at 28,242.21
DJIA: closed down 177.26 points, or 0.6%, at 30,814.26
S&P 500: closed down 0.7% at 3,768.25
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GBP: down at USD1.3555 (USD1.3597)
EUR: down at USD1.2076 (USD1.2098)
Gold: up at USD1,836.30 per ounce (USD1,832.20)
Oil (Brent): flat at USD54.85 a barrel (USD54.87)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
US Martin Luther King Day holiday - financial markets closed
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Average UK house prices eased monthly in January, with buyers desperately racing to beat the stamp duty deadline. According to property listing platform Rightmove, the average price of new properties coming to market declined 0.9% to GBP317,058 in January from GBP319,945 at the end of 2020. Annually, house prices climbed 3.3% in January, though growth slowed from 6.6% in December. Some new sellers cut prices "hoping to tempt" buyers into sealing a sale before the UK stamp duty holiday ends in March, but Rightmove said new buyers are unlikely to complete a deal in time. Back in July, UK Chancellor Rishi Sunak said the threshold for stamp duty would be temporarily raised to GBP500,000 from GBP125,000 until March 31, 2021.
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The UK would be "lucky" to strike a trade deal with Washington in Joe Biden's first term as president, the former UK ambassador to the US said. Ahead of Biden's inauguration on Wednesday, Nigel Darroch, who was forced to quit in 2019 after frank diplomatic cables referring to current President Donald Trump were leaked, said he doubts a UK-US trade agreement will be completed within the next four years. He told BBC Radio 4's Westminster Hour on Sunday: "Biden has said in the last few weeks that doing trade deals is not a priority for him for at least the first part of his presidency and my guess is that certainly covers the next 12 months, it may cover the next 24 months. When he comes to do one, there are two much bigger trade deals that he could potentially do, rather than a deal with a medium-sized country of 65 million people."
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BROKER RATING CHANGES
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JEFFERIES RESUMES SSE PLC WITH 'BUY' - TARGET 1,770 PENCE
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RBC RAISES DIXONS CARPHONE TO 'OUTPERFORM' ('SECTOR PERFORM') -TARGET 150 (135) PENCE
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BARCLAYS RAISES CHEMRING TO 'OVERWEIGHT' ('EQUAL WEIGHT') - TARGET 380 (250) PENCE
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COMPANIES - FTSE 100
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A consortium including retailer Next is currently the frontrunner to buy Topshop owner Arcadia Group, the Times and Guardian newspapers reported on Sunday. High street giant Arcadia, owned by Philip Green, owns a number of brands including Topshop, Dorothy Perkins and Burton. It sank into administration at the end of November, putting 13,000 jobs at risk. The auction for Arcadia is now near conclusion and Next, led by Simon Wolfson, is partnering with US hedge fund Davidson Kempner, according to both the Guardian and Times. According to the Guardian, Mike Ashley's Frasers Group - owner of Sports Direct and House of Fraser - and online retailer boohoo Group, also are considering bids. The Times said boohoo "is now considered an outside bet". Final bids for Arcadia are due in on Monday.
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AstraZeneca said Enhertu has been approved in the US for the treatment of advanced gastric cancer. Enhertu, whose generic name is trastuzumab deruxtecan, is produced together with Japan's Daiichi Sankyo Co. Astra said the approval by the Food & Drug Administration was based on the positive results from the randomised Destiny-Gastric01 phase II trial conducted in Japan and South Korea.
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A law firm is launching action on behalf of BT Group customers claiming they were overcharged for landlines. Mishcon de Reya has filed claims at the Competition Appeal Tribunal it says could result in payments of up to GBP500 each for 2.3 million BT customers. BT said it "strongly disagreed" with the action, adding it had offered discounted landline and broadband packages for years. The claim is being made on behalf of Justin Le Patourel, the claimant representative and founder of Call, which means Collective Action on Land Lines. He said: "Ofcom made it very clear that BT had spent years overcharging landline customers but did not order it to repay the money it made from this."
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COMPANIES - FTSE 250
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Spirent Communications said it expects profit for 2020 in line with market forecasts. The automated testing and assurance solutions provider said it delivered good momentum in the final quarter of the year, despite the challenges posed by Covid-19. For the full-year, revenue grew by 4% to USD522 million, and Spirent expects an adjusted operating profit in line with market consensus of USD101.5 million, which would be up from USD92.9 million in 2019. Spirent also expects a stronger adjusted operating margin of "almost" 20% from 18% in 2019. "We delivered another year of revenue and earnings growth and, although we experienced some softness in the latter half of the year due to timing of expenditure by global service providers, the 5G-driven momentum in our Lifecycle Service Assurance business continues to be strong," said Chief Executive Eric Updyke. Updyke added that the firm has started the new year "well placed", though growth is expected to be second-half weighted due to the impact of Covid-19 on customer spending habits.
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Centrica said Chief Financial Officer Johnathan Ford will step down with immediate effect due to personal reasons and leave the company at the end of the month. The British Gas parent has appointed Kate Ringrose, financial controller, as its new CFO. Ringrose has been with Centrica since 2005.
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Genus said strong recent trading has continued, and it expects to beat previous profit estimates. The animal genetics company said adjusted pretax profit is now expected to be within a range of GBP47.0 million and GBP49.0 million for its first half, being the six months to December 31, which would be up on GBP36.6 million a year ago. Revenue for the period is expected to come in between GBP285.0 million and GBP287.0 million, also up from GBP270.7 million year-on-year. "High growth in volumes, revenue and adjusted operating profit were achieved across the groups' operations by both PIC and ABS. Business trends are consistent with those previously announced at the time of the [November] AGM, including further strong growth achieved in particular by PIC in China and by ABS in Brazil, Russia, India and China," said Genus. PIC focuses on pork and ABS on beef and dairy. Based on the strong first-half performance, Genus anticipates beating its previous profit growth expectations for the financial year ending June 30, though growth in the second half is likely to be lower than that seen in the first six months of the year.
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COMPANIES - MAIN MARKET AND AIM
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Equiniti confirmed it is in talks to sell a "key part" of Equiniti Financial Services, namely EQi's direct-to-consumer customer book, predominantly the Selftrade business. Negotiations are ongoing and there is no certainty a transaction will take place, the financial administration outsourcer cautioned.
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Devro said trading in the final months of 2020 was better than expected, and it now expects to deliver a full-year profit at the upper end of market forecasts. The maker of collagen products for the food industry said the trading was driven by higher volumes and margins, and noted that company-compiled consensus for operating profit ranges between GBP38.0 million and GBP40.5 million.
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COMPANIES - GLOBAL
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Stellantis became the world's fourth-largest carmaker when the merger between Fiat Chrysler Automobiles and PSA Group was completed on Saturday. On Monday last week, shareholders approved the merger of French carmaker PSA and Italian-American peer Fiat Chrysler. The accord brings together PSA's Peugeot, Citroen and other brands with Fiat Chrysler's stable that includes the two namesake brands, as well as Jeep, Alfa Romeo and Maserati. By number of cars sold, Stellantis will now rank behind Volkswagen, the Renault-Nissan-Mitsubishi alliance, and Toyota Motor – though it will be the third-largest automaker by revenue. Exor on Saturday said it has "significant influence" over newly-formed Stellantis. The Netherlands-based, Italian-listed investment company said it owns 449.4 million shares, just over a 14% stake.
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Monday's Shareholder Meetings
Craven House Capital PLC - AGM
Keras Resources PLC - GM re warrants and director subscription
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By Tom Waite; thomaslwaite@alliancenews.com
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