European stocks fall after Underwhelming Chinese growth data

After the announcement of dismal Chinese GDP figures, European stock markets declined on Monday as the second quarter results season got underway.

At 07:30 GMT, the FTSE 100 in the United Kingdom traded down 0.1%, the CAC 40 in France dropped 0.7%, and the DAX index in Germany traded down 0.2%.

The release of data suggesting that China’s economic development, a significant export market for Europe’s greatest corporations, significantly slowed through the second quarter has negatively impacted sentiment in Europe.

China’s second-quarter gross domestic product increased by 0.8% from the first quarter, which was slightly higher than forecasted growth of 0.5% but significantly slower than the 2.2% witnessed in the first quarter.

The second quarter’s annualised GDP growth was 6.3%, which fell short of estimates for growth of 7.3%. This was partly due to a weaker basis for comparison from the COVID-impacted quarter last year.

With the help of a robust first quarter, the Chinese economy has now grown by a total of 5.5% so far in 2023; however, growth has slowed over the last three months.

With the broad-based Stoxx 600 index rising nearly 3%, investors have used these figures to sell into last week’s healthy gains. Data showing rapidly cooling inflation in the U.S. has raised expectations that the Federal Reserve may be about to end its aggressive rate-hiking cycle, which would boost the U.S. economy.

Only the final Italian consumer price reading is scheduled for release on Monday, so the economic data calendar is largely empty. Nevertheless, investors will be watching the speeches made by President Christine Lagarde, members of the ECB Board Fabio Panetta, Frank Elderson, and Philip Lane during the session for hints about the central bank’s thinking in advance of the next policy-setting meeting at the end of this month.