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Asian stocks climb despite slower Chinese growth

Asian equity markets started the week higher despite data showing China’s economy grew at its slowest pace in a year, with a rare contraction in fixed-asset investment weighing on sentiment. Chinese stocks advanced alongside Japan’s Nikkei 225, which surged after news of a coalition government, while investors looked ahead to a busy week of major US tech earnings and key inflation data. Gold was trading slightly higher around USD 4260 per ounce on Monday, while Treasury yields bounced back somewhat from the end of last week, with the 2-year near 3.5% and the 10-year back above 4%.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

Strategist China
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China’s economy expanded by 4.8% year-on-year in the third quarter, marking its slowest pace in a year and easing from 5.2% growth in the second quarter, official figures released on Monday showed. Fixed-asset investment, which includes real estate, unexpectedly fell by 0.5% for the first nine months, registering a rare contraction not seen since 2020, and property investment continued to decline. Industrial production exceeded expectations in September with 6.5% year-on-year growth, while retail sales rose by 3%, but slowed from 3.4% in August. Ongoing weakness in the real estate sector and muted private investment are key factors weighing on China’s outlook. China nevertheless left its benchmark lending rates unchanged for the sixth consecutive month, maintaining the one-year loan prime rate at 3% and the five-year rate at 3.5%. Chinese equities rose on Monday, with the Hang Seng Index climbing 2.4% and the mainland CSI 300 up 0.6%, as investors largely shrugged off weaker-than-expected GDP figures. Broader Asia-Pacific markets also moved higher, supported by Japan’s Nikkei 225 surpassing 49,000 points after the government announced a coalition deal. The Nikkei 225 surged 3%, while Korea’s Kospi was up 1.6% and Australia’s S&P/ASX 200 advanced 0.4%.

Earnings and inflation in focus

This week, the third-quarter earnings season is in full gear, highlighted by major releases from Tesla (Wednesday) and several leading semiconductor producers, including Texas Instruments (Tuesday), KLA Corporation, Lam Research (Wednesday), and Intel, STMicroelectronics (Thursday). Macroeconomic data is also in focus, with the United Kingdom, Canada and Japan reporting consumer inflation figures on Wednesday and Friday. The US Consumer Price Index (CPI) is also due on Friday but may be delayed due to the ongoing government shutdown. Purchasing Managers’ Indices (PMI) are released on Friday in the US, UK, euro area, France, Germany, and Japan, offering fresh insights into business activity.

Wall Street gains as trade tensions ease

US equities closed higher on Friday after conciliatory statements from US President Donald Trump regarding China led to renewed optimism over trade talks, while concerns about the banking sector subsided. The Dow Jones Industrial Average rose 0.5% to 46,190.61 points, the S&P 500 added 0.5%, and the Nasdaq 100 advanced 0.6%, with all three indices recording weekly gains. Sentiment in financials improved as several regional banks reported lower loan loss provisions and solid earnings. That helped the benchmark KBW Bank Index to a gain of 0.6% on Friday. Disclosures by Zions and Western Alliance had set off fears earlier in the week of poor credit practices in the US regional banking sector, leading to losses for bank stocks on Thursday.

Euro-area inflation rises to 2.2% in September

The euro area annual inflation rate increased to 2.2% in September from 2.0% in August, according to Eurostat data released on Friday, marking an acceleration from 1.7% a year earlier. Inflation in the wider European Union also moved higher, reaching 2.6% compared to 2.4% in August and 2.1% in September last year. Services contributed the most to wider price increases in the euro area. European equities ended lower on Friday. The Euro Stoxx 50 dropped 0.8%, Germany’s DAX slid 1.8% and France’s CAC 40 edged down 0.2%. The Swiss Market Index fell 0.5%.

Israel strikes Hamas, suspends Gaza aid

Israel launched air strikes against Hamas targets in Gaza and suspended aid shipments on Sunday in response to what it called a breach of the ceasefire by Hamas, leading to the deaths of two Israeli soldiers. The Israel Defense Forces targeted dozens of sites, including weapons depots and tunnels, before later announcing a return to ceasefire enforcement, as tensions persisted following a recent truce brokered under Trump’s peace plan. Reports indicated significant casualties among Palestinians and ongoing hostilities in contested areas, with aid deliveries through the Rafah crossing postponed indefinitely. Regional powers and US officials are holding discussions this week in a bid to stabilise the situation, while both sides accused each other of violating the agreement.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Bank of Canada Business Outlook Survey (16:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.