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China’s growth rate might still be on a steadily declining path, but investors were happy enough to see it come in line with expectations, growing by 7.5% in the second quarter. Beijing was keen to emphasise that internal consumption was picking up the slack, and helpfully retail sales rose strongly during June. Combined with a disappearance of eurozone tensions and diminishing fears about US tapering, we could be in for a week of quiet, steady gains for stock markets.
Miners are in buoyant form in London after that Chinese GDP data, which continues to put growth in the west in the shade. With the Chinese economy still expanding at a healthy pace, it looks as if demand for raw materials will not drop off in the near term. Also doing well today is the banking sector, with RBS racing 3% higher and HSBC edging up after news of a sale of its private banking arm in Germany. Earnings updates are more abundant later in the week, but the China news is sufficient to put the FTSE 100 on the front foot for now.
Meanwhile, after a positive start to earnings last week, US indices are looking towards the next batch of bank earnings, with Citigroup the next in line. Loan growth appears to be on the up, as the US housing market stages a more solid recovery, and this will help keep investors happy. Retail sales and the Empire manufacturing index are on the calendar for today, and investors will be looking to see if Wall Street is minded to challenge the highs seen back in late May. Ahead of the open, we expect the Dow Jones to start almost unchanged at 15,466.