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China growth offers respite from AI worries

A stronger-than-forecast Chinese growth report on Monday provided some reassurance about the economy, although buoyant exports continued to mask weakness in domestic spending and property. Mainland shares held steady, while equities elsewhere in Asia traded unevenly as investors remained wary of the costs and potential returns of the AI investment boom. Those concerns drove a technology-led retreat on Wall Street on Friday, whereas European equities advanced despite a pickup in euro-area inflation. Hong Kong’s stock market is shut on Monday for a public holiday.

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

Strategist China
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China’s economy grew by 4.5% year-on-year in the third quarter, up from 4.3% in the previous quarter and exceeding economists’ expectations, according to data released on Monday. Exports of chips and electronic components benefited from global demand for artificial intelligence infrastructure, helping growth average 4.6% over the first nine months, within Beijing’s annual target range of 4.5% to 5%. Retail sales growth accelerated to 1.1% year-on-year in September from 0.4% in August, but fixed asset investment fell by 7.2% in the first nine months, matching the decline recorded through August, while property investment contracted by 20.2%. The figures highlight an increasingly uneven recovery, with strong manufacturing exports offsetting subdued domestic demand and a prolonged housing downturn.

Chinese stocks stable despite regional AI concerns

Mainland China’s CSI 300 was little changed on Monday, recovering earlier losses after stronger-than-expected economic data, while Hong Kong markets were closed for a public holiday. Broader Asian equity markets were mixed as concerns about the financing and profitability of artificial intelligence investments continued to weigh on technology shares, with Japan’s Nikkei 225 down 0.7% but Korea’s Kospi up 0.5%. Indonesia’s Jakarta Composite fell more than 5%, extending last week’s sharp losses after MSCI warned that the country could lose its emerging-market classification. Australia’s S&P/ASX 200 rose 0.4%, while India’s Nifty 50 fell 0.3%.

Oil declines following Putin report

Brent crude oil futures declined 1.9% to USD 107.77 per barrel, while West Texas Intermediate (WTI) futures fell 1.7% to USD 97.32 per barrel, after a Wall Street Journal report published on Monday said Russian President Vladimir Putin proposed talks with US President Donald Trump and Chinese President Xi Jinping to negotiate an end to the war in Ukraine. The US Dollar Index was little changed at 101.82, while gold rose 0.5% to around USD 4180 per ounce.

US stocks fall on AI financing fears

US equities declined last Friday, with the Nasdaq 100 falling 2.5% to 29,187.55 points, the S&P 500 losing 1.1% to 7659.44 points and the VIX rising 21.5% to 19.99 as investors questioned the financing costs and profitability of artificial intelligence investments. The Dow Jones Industrial Average slipped 0.3% to 52,002.41 points, although it gained 0.7% over the week, supported by its lower exposure to major technology stocks. AI cloud services provider Coreweave dropped 11.9% as concerns about its financial position persisted despite reassurances from Nvidia chief executive Jensen Huang. Rising oil prices added to inflation concerns after lawmakers proposed legislation to block US President Trump’s plans to increase supplies of Russian diesel to global markets.

Euro-area inflation accelerates to 3.8%

Consumer prices in the euro area rose 3.8% year-on-year in September, compared with 3.2% in August and 2.2% a year earlier, Eurostat reported on Friday. Energy was the main driver of the acceleration, with annual price growth reaching 18.9%, up from 14.3% in August, while services inflation increased to 3.2% from 3%. Core inflation, which excludes energy, food, alcohol and tobacco, edged up to 2.5% from 2.4% in August. European stocks closed higher on Friday, with the Euro Stoxx 50 gaining 0.6%, Germany’s DAX rising 1% and France’s CAC 40 advancing 0.3%. The Swiss Market Index gained 0.3% in the latest session.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from BHP.

Economic data in focus: Bundesbank monthly report (12:00), Canadian Consumer Price Index (14:30).

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