Global stock markets were stationary on Monday, bringing a halt to last week’s rally as investors assessed China’s latest economic growth target. The country’s lower-than-expected growth target gave rise to assumptions that the Chinese government would not be deploying stimulus.
European stocks rose marginally, with the Stoxx Europe 600 gaining 0.1%, while S&P 500 futures, Dow Jones Industrial Average and Nasdaq 100 futures remained little changed.
While the US dollar remained little changed, West Texas Intermediate crude fell 0.6% to $79.19 a barrel following the release of China’s new economic target. Gold rose by 0.2% to $1,857.90 an ounce.
“The announcement may disappoint some investors but on the other hand, it could ease some fears of a strong inflationary impact from China,” Kristoffer Kjaer Lomholt, head of FX and corporate research at Danske Bank observed.
Following such developments, investors are now looking to Fed Chair Jerome Powell’s testimony to the Senate and House committees to detect the Federal Reserve’s latest policy decisions.
“Powell could surprise markets this week with his testimony but they have already set it up so they hike in 25 basis-point increments,” Nikko Asset Management chief strategist John Vail believes.