Chinese GDP, US Bank Income, Eurozone Recovery


By Jeffrey Smith — China’s economy grew at its slowest pace since Mao Zedong’s death last year (excluding 2020), as the population shrank for the first time since the 1960s. Goldman Sachs (NYSE:) and Morgan Stanley (NYSE:) reports earnings, as does crypto-exposed Silvergate (NYSE:). Stocks are expected to reopen lower after the Martin Luther King Day holiday. There is a major reversal in a key sentiment indicator in Germany and the ECB is warning that it will have to keep raising rates for some time to come. Oil prices are rising ahead of the monthly OPEC report. Here’s what you need to know in the financial markets on Tuesday, January 17.

1. China’s growth slows to 3% as population falls for first time in 60 years

The Chinese economy performed slightly better than expected at the end of last year, but growth was still weaker (with the exception of the first year of the pandemic) than at any time since the death of Mao Zedong.

rose 3.0% in 2022, marginally above some heavily revised forecasts on the back of a rebound in and into December as the ruling Communist Party backed away from its restrictive “Zero-COVID” policy.

Beneath the data dump, one striking statistic stood out: China’s population shrank for the first time since the 1960s, by 850,000 to 1.412 billion. The figures underline the rapid deterioration of China’s demographic situation, with births continuing a decline that has sharply strengthened since the start of the pandemic. China’s working-age population has been declining for several years, shrinking by an average of 0.4% per year in the seven years leading up to the pandemic.

2. Goldman, Morgan Stanley to report earnings

and will wrap up a downright disappointing round of quarterly earnings from the largest US banks.

Earnings are expected to fall by about a third at Morgan Stanley and nearly half at Goldman, both of which rely more on global market performance and deal making than rivals Citi group (NYSE:) and Bank of America (NYSE:) this year. However, that hasn’t stopped them from outperforming their universal banking rivals over the past 12 months.

Goldman will likely quantify what reports suggest is the biggest job loss since the 2008 crisis, while investors will want to see if Morgan Stanley adds anything to the roughly 2,000 jobs it posted in December.

3. Stocks will open lower as Cohen goes Chinese

US equity markets will later reopen in a relatively gloomy mood, with the gloom over the outlook for the global economy not being alleviated much, if at all, by Chinese data.

At 06:10 ET (11:10 GMT), we were down 69 points, or 0.2%, while and both were down 0.3%. The three major cash indices are up between 3% and 5% this year as hopes of an end to Federal Reserve rate hikes have strengthened.

Stocks likely to come into focus later include alibaba (NYSE:), where activist investor and founder of Chewy (NYSE:) Ryan Cohen has taken a small stake as part of an accelerated share buyback campaign.

will report earnings after the bell, while – bankers for much of the US cryptocurrency universe – will report early.

4. Better prospects in Europe

The mood has turned for the better in the eurozone. The economic sentiment index for Germany, the region’s largest economy, fell to 16.9 in January, an 11-month high, from -23.3 in December.

The index, which is better at marking tipping points in sentiment than at measuring actual activity, rallied on the back of the sharp fall in energy prices over the past month, significantly improving the outlook for Germany’s energy-intensive factories. improved.

Speaking at the World Economic Forum in Davos, Bank of Portugal governor Mario Centeno – who previously chaired the group of eurozone finance ministers – also noted that the eurozone economy has been surprisingly strong over the past year. Meanwhile, the ECB’s chief economist Philip Lane – a well-known inflation pigeon – told the FT that the ECB will have to move interest rates into a restrictive area to bring inflation under control, adding that the issue “will become a problem for the next year or two.”

The , which is up more than 2% against the dollar over the past month, remained flat.

5. Oil Rises Higher Than OPEC Report

Crude oil prices hit a one-week high after OPEC Secretary General Haitham al-Ghais said the organization will do “everything” to balance the oil market this year. He added that the group is “cautiously optimistic” about the outlook for the global economy, balancing an expected slowdown in Western countries against a rebound in demand from China.

OPEC releases it to the oil market at 7:00 AM ET, but the release of US inventory data from the American Petroleum Institute is pushed back to Wednesday this week due to the US holiday on Monday.

At 06:30 ET, futures were up 0.2% to $80.28 a barrel, while they were up 1.0% to $85.27 a barrel.