Chinese Economy Exceeds Expectations. Stocks On The Rise. Intesa Sanpaolo +0.5%

After several weeks of rather negative forecasts regarding China’s economic performance, investors could finally breathe a sigh of relief. First of all, they were encouraged by data on the recovery of retail sales in China (the real Achilles heel of the entire Chinese economy), which grew by 4.6% in August, significantly surpassing estimates.

Data published by National Bureau of Statistics of China is truly encouraging. Not only retail sales, but also industrial production in China rose above expectations in August, to +4.5% for the year. Urban unemployment continues to decline, from 5.3% in July to 5.2% in August, the lowest level in 16 months. Unfortunately, fixed investment is lagging, earning +3.2% in the first 8 months of 2023 (0.1% less than official forecasts) compared to +3.4% recorded in the previous statistical period (January-July). The real estate sector is still unable to rise (-8.8%), which confirms the crisis of the sector that is far from being resolved.

Financial operators also hope that the period of uncertainty in the European Central Bank’s monetary policy is over. On Thursday, the ECB once again increased the cost of money by 25 basis points, after which European Central Bank President Christine Lagarde suggested a “pause.” Markets expect this blow to be the final tightening in 2023.

Regarding the situation in the European banking sector, shares of the Intesa Sanpaolo group are growing rapidly (+0.5%) after the analysts’ report from Jefferies about the sector with a “buy” recommendation.

Finally, automobile industry stocks were in the spotlight after the strike started at three manufacturing plants, one each for the General Motors, Stellantis, and Ford groups.

Among the positive factors, Italian economic and financial newspaper Il Sole 24 Ore highlighted “the record debut of Arm on the Nasdaq that added +24.7%, which could also boost Old Continent technology stocks.”

On the foreign exchange market, writes Il Sole 24 Ore, “the euro/dollar ratio remains at a minimum of 1.066, the price of gas traded in Amsterdam decreases by 34.6 euros per megawatt-hour (-2.59%). The price of oil is rising: November Brent futures remain above $90 per barrel at 94.4 (+0.73%), and October WTI futures are at $90.89. The Japanese stock market closed with a spike, rising 1.10% to 33,533, hitting a two-month high.”