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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Early Morning Call: China economy grows 3% in 2022, far below estimates

China's economic growth in 2022 slumped to one of its worst levels in nearly 50 years.

Equity market overview

European equity markets were hesitant at the start of Tuesday’s session, after a mixed session in the APAC region. US indices reopened after an extended weekend.

In Australia, Westpac consumer sentiment rose in January for the second straight month to 84.3, from 80.3 the previous month. If this is the largest increase since April 2021, the index reading of 84.3 still means pessimists greatly outnumber optimists.

China's economic growth in 2022 slumped to one of its worst levels in nearly 50 years. Fourth quarter (Q4) GDP grew 2.9%, slower than the third quarter's 3.9% pace but exceeding market expectations of a 1.8% gain.

On a quarterly basis, GDP stalled, coming in at 0.0% in the fourth quarter, compared with growth of 3.9% in the previous quarter. This means that in 2022, China's economy expanded 3%, missing the official target of "around 5.5%" and a drop from 8.4% growth recorded in 2021. If we exclude the 2.2% expansion in 2020, this is the worst reading since 1976.

Factory output grew 1.3% in December from a year earlier, slowing from a 2.2% rise in November, while retail sales, a key gauge of consumption, shrank 1.8% last month, extending November's 5.9% drop. However, both indicators beat expectations.

The UK unemployment rate remains at 3.7% as expected in November. Meanwhile, the number of job vacancies fell by 75,000 to 1.16 million as uncertainty across industries lead to holding back on recruitment.

At 10am, Germany ZEW economic sentiment is expected to rise for a fourth straight month to -15 for the month of January. And later at 1.30pm, Canada consumer price index growth is expected to slow in December to 6.3% year-on-year (YoY), after 6.8% the previous month.

Economic data

Rio TintoRio Tinto's iron ore shipments rose in the fourth quarter of 2022, as it benefited from a continued ramp-up at its Gudai-Darri mine in Western Australia. Q4 iron ore shipments increased by 3.8% to 87.3 million tonnes, bringing full-year shipments to 321.6 Mt, beating consensus estimate of 320.2 million tonnes.

As for the current year, Rio Tinto maintained its full-year (FY) iron ore shipments forecast of 320 Mt to 335 Mt. The miner also warned that China's reopening from Covid-19 restrictions is set to raise near-term risks of labour and supply chain shortages.

Ocado posted record Christmas sales, up 15% over the five days before Christmas. Q4 retail revenue rose by 0.3% to £549.4 million. Orders were up 13% while the average basket value was down 1.3%.

Goldman Sachs is set to report its earnings for the fourth quarter before market open. Because of its dependence on investment banking activity, Goldman Sachs is expected to post significant quarterly revenue and earnings declines. Analysts expect earnings to fall by around 50% to $5.56 per share. Revenue is also forecast to drop 14% to $10.79 billion.

Also expected today are Morgan Stanley and Netflix.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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