A customer visits a supermarket in San Mateo, California, on Dec. 12, 2023.
Li Jianguo | Xinhua News Agency | Getty Images
This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
China, Hong Kong shares lead gains
China and Hong Kong stocks led gains in Asia on Thursday after the People’s Bank of China said it would cut reserve requirements for the country’s lenders. Overnight, U.S. stocks ended mixed as the S&P 500 hit another record high, while the Nasdaq Composite also closed higher. But the blue-chip Dow Jones Industrial Average ended in the red. Fourth-quarter U.S. GDP data is due on Thursday, which is expected to show the economy is at the crossroads.
China to raise confidence ramps up support
Expectations are rising that China will do more to boost its ailing economy and stock markets, especially after the central bank’s easing announcements on Wednesday. The latest move “may be interpreted as the beginning of a policy pivot from previous reactive and piecemeal measures by investors,” said one China economist in note.
Tesla’s earnings disappoint
Tesla reported fourth-quarter earnings that missed estimates as automotive revenue increased just 1% from a year earlier. The electric vehicle maker also issued a downbeat full-year production outlook. The weak guidance weighed on the stock, which dropped nearly 6% in extended trading. On Thursday, shares of Tesla’s suppliers in Asia fell on the back of its bleak outlook.
Survey shows U.S. firms favor India over China
In a survey of 500 executive-level U.S. managers conducted by market research OnePoll, 61% said they would pick India over China if the two could manufacture the same materials. It also showed 56% preferred India to serve their supply chain needs within the next five years over China.
[PRO] Health care no longer a laggard
The health-care sector “has shrugged off the title of being a notable laggard in 2023,” Citi analysts said in a recent note. They have cited biotech in particular as one of a few areas to watch. Growth stocks such those in tech and biotech are seen as mostly benefitting from Fed rate cuts.
The bottom line
All eyes will be on the state of the U.S. economy as the first official reading of fourth-quarter GDP data drops Thursday morning.
Wall Street will be parsing the details for signs on the health of the economy. Although economists no longer see a recession on the horizon, some suspect the pace of real GDP growth will moderate in the coming quarters.
The consensus outlook is for economic growth to come in at an annual rate of 2% in the fourth quarter, a slowdown from 4.9% in the third. This will be the lowest reading since the 0.6% decline in the second quarter of 2022.
“Data released [Thursday] may in retrospect turn out to document the one quarter of true ‘Goldilocks’ conditions,” Citi economist Andrew Hollenhorst wrote. “But we do not share the market and Fed’s sanguine assessment of the macroeconomy over the remainder of the year.”
In a recent commentary, Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote the actual GDP data may hold some surprises as forecasts could sometimes be thrown off by late-arriving data.
Since 2016, a slew of government data was published the day before the GDP report — such as, business inventories and trade figures, which are part of the GDP calculation. But those are now scheduled to be released at the same time as Thursday’s report.
“The GDP numbers have much greater potential to surprise than will be appreciated by investors without pre-2016 experience,” Shepherdson said.
Whatever the numbers, investors will chew over the data to gauge what direction the Fed will take in its anti-inflation fight.
— CNBC’s Jeff Cox contributed to this report.