Danske Daily: Asian Stocks Slip, Ireland Upgraded

Market movers today
The US markets are closed due to Martin Luther King day. With no significant data on the calendar either it is likely to be a quiet day.

Italy releases industrial sales and orders at 10:00 CET. They are not followed that closely but generally give a good cross-check of the PMIs. Italian orders confirm a pick-up in activity lately.

Key events on the global agenda this week will be German ZEW (Tuesday), Euro and Chinese Flash PMI (Thursday) and US existing home sales (Thursday).

In Sweden Riksbank Deputy Governor Martin Floden will hold a presentation on the economic situation and the role of monetary policy.

Selected market news
Chinese data for GDP for Q4 released this morning were close to expectations showing a slight easing to 7.7% y/y (in line with consensus) from 7.8 y/y in Q3. The slowdown was more evident in the q/q rate, though, which fell more than expected to 1.8% (consensus 2.0%) from 2.2% in Q3. China also released data on industrial production and retail sales. These were in line with expectations at 9.7% y/y and 13.6% y/y, respectively.The numbers confirm that the Chinese economy eased somewhat in Q4 after a pick-up in growth in Q2 and Q3. The Chinese authorities have tightened credit conditions somewhat and investments are slowing down after driving the past quarters’ recovery. We expect Chinese growth to stay close to the current rate as stronger exports and consumption should take over from weaker investment growth.

Asian stocks slipped further following the Chinese data after a fairly weak start to the year – see Bloomberg. Fears over policy tightening and slowing growth are taking their toll on markets.

Ireland was upgraded by Moody’s on Friday by one notch to Baa3 (investment grade) – see Ireland upgraded to investment grade (+) by Moody's. Moody’s also put Ireland on positive outlook. We expect this to lead to further tailwind for Irish bonds today as only one out of 10 analysts was expecting the upgrade according to a Bloomberg survey – see FT.

Japan’s industrial output fell 0.1% m/m in November according to the final release. It comes after strong increases in September and October, though, and should not be seen as a sign of weakness but rather as volatile data. Investments and consumption activity are still strong and growth is likely to be robust in Q4 and Q1 ahead of the VAT hike in April.

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