Happy Friday. A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here.
China’s growth dropped to its lowest level in nearly three decades as the world’s second largest economy continues to feel the pain from its trade conflict with the United States.
The country’s gross domestic product grew at 6% between July and September, my CNN Business colleague Laura He reports from Hong Kong. That’s the weakest quarterly growth rate since 1992, and down from 6.2% the previous quarter.
Context: The worse-than-expected figure emerged just one week after the United States and China reached a tentative trade truce to avert more damage. That agreement could relieve some pressure on China’s economy. But it’s far from a cure-all.
“Ongoing negotiations may have some positive impact on business [sentiment], but despite the potential mini deal, most of the US tariffs on imports from China remain, hurting Chinese exports,” said Chaoping Zhu, global market strategist at JPMorgan Asset Management.
The Shanghai Composite dropped 1.3% Friday, erasing gains the index had made since news of an agreement.
The Chinese data showed some pickup in September. Growth in industrial production jumped to 5.8% from 4.4% the previous month, and retail sales rose 7.8% in September compared to the same period one year ago.
But experts warn that any recovery may be short-lived.
“Cooling global demand will continue to weigh on exports, fiscal constraints mean that infrastructure spending will wane in the near-term, and the recent boom in property construction looks set to unwind,” Julian Evans-Pritchard, senior China economist for Capital Economics, said in a research note to clients.
Analysts at Nomura see China’s GDP growth dropping to 5.8% in the fourth quarter of 2019 as exports are hit again by the slowing global economy and the trade conflict.
Aramco’s IPO gets delayed … again
Investors will have to wait a bit longer for a piece of Saudi Aramco’s massive public listing.
The timing of the blockbuster IPO was pushed back to allow the state-run Saudi oil company to publish quarterly results, which will provide clarity on the impact of last month’s attacks on its oil facilities, a source familiar with the process told CNN Business.
Market watchers had expected the IPO to launch in the coming days, paving the way for a November listing on Saudi Arabia’s Tadawul exchange in Riyadh.
What Aramco says: “The company continues to engage with shareholders on IPO readiness activities. The company is ready and timing will depend on market conditions and be at a time of the shareholders’ choosing.”
Remember: The unprecedented September attack on Aramco, the world’s most profitable company, briefly knocked out half of its oil production. But Aramco quickly restored the output, easing market fears of a shortage.
The company had been clear that it didn’t expect the incident to derail the IPO process, and analysts believed it actually strengthened Crown Prince Mohammed bin Salman’s resolve to get a deal done. But investors clearly want more information about the company’s finances before committing to a valuation in the $2 trillion range that bin Salman is targeting.
Let the Brexit vote counting begin
The British pound and UK stocks shot up on news that Prime Minister Boris Johnson had clinched a new Brexit agreement with the European Union. Then the political reality set in.
Johnson still needs to get his deal through a special session of the UK Parliament scheduled for Saturday. Opposition parties and a group of lawmakers from Northern Ireland say they won’t support the agreement, raising serious doubt about whether Johnson can succeed where his predecessor, Theresa May, failed.
“Johnson has a chance, but it is going to be tight,” Kallum Pickering, senior economist at Berenberg, said Thursday in a note to clients. Expect the pound to stay jumpy on Friday as traders keep a running tally of the parliamentary math.
American Express and Coca-Cola report earnings before US markets open.
Coming tomorrow: Britain’s Parliament will hold a make-or-break vote on Prime Minister Boris Johnson’s new Brexit deal.