Investing.com -- China Premier Li Qiang promises that his country's economic growth will rebound in the second quarter, while Russian President Vladimir Putin attempts to regain control of a fraught situation. Lordstown files for bankruptcy and major central bankers gather in Portugal.
1. China to meet 2023 growth target - Li
China's economic growth will be higher in the second quarter than the first and is expected to reach the annual economic growth target of around 5%, Premier Li Qiang said Tuesday, promising more stimulus to achieve this goal.
"We will launch more practical and effective measures in expanding the potential of domestic demand, activating market vitality, promoting coordinated development... and promoting high-level opening to the outside world," Li said, at the World Economic Forum in Tianjin on Tuesday.
This will come as a major relief to investors around the world that had been fretting that growth in the Chinese economy, the second largest in the world, was stuttering, even after the end of its restrictive COVID policies.
China's GDP grew 4.5% year-on-year in the first three months of the year, but momentum has faded sharply since, prompting many senior banks to downgrade their growth estimates.
On Monday, S&P Global joined the crowd, cutting its forecast for China's economic growth to 5.2% in 2023, down from an earlier estimate of 5.5%, becoming the first global credit ratings agency to do so this year.
2. Putin seeks to regain control
Russian President Vladimir Putin sought to reassert his authority on Monday, stating in a televised address that he allowed the mutiny by the Wagner group of mercenaries to go on as long as it did to limit the violence.
"From the very beginning of the events, steps were taken on my direct instruction to avoid serious bloodshed," Putin said.
The Russian leader also said that the Wagner troops who chose not to join the Russian Army could leave for Belarus or simply go home.
However, he didn’t comment on the fate of the group’s chief Yevgeny Prigozhin, and it’s difficult to see how he can afford to leave such a challenge to his position at large.
3. Futures edge higher; big week for economic data
U.S. futures edged higher Tuesday, rebounding after recent losses as investors await the next round of economic data for clues on the health of the U.S. economy heading into July’s Federal Reserve Meeting.
At 05:00 ET (09:00 GMT), the Dow futures contract had climbed 20 points or 0.1%, S&P 500 futures rose 8 points or 0.2%, and Nasdaq 100 futures gained 50 points or 0.4%.
The three main equity averages fell on Monday, with the tech-heavy Nasdaq Composite leading the way, dropping nearly 1.2%. Yet, despite these losses, both the S&P 500 and Nasdaq are still on pace to finish June more than 3% higher, while the Dow Jones Industrial Average is poised to gain nearly 2.5%.
These monthly gains came as the Fed paused rate hikes this month, but indicated it could raise rates again this year if the economic outlook pointed in that direction.
Friday’s release of May data on the personal consumption expenditures price index, the Federal Reserve’s preferred inflation gauge, is seen as key, but ahead of that Tuesday sees the release of the latest new home sales, building permits and durable goods orders.
Earnings are due from the likes of drugstore retailer Walgreens Boots Alliance (NASDAQ:WBA) and Wall Street firm Jefferies Financial Group (NYSE:JEF).
4. Lordstown files for bankruptcy, sues Foxconn
U.S. electric truck manufacturer Lordstown Motors (NASDAQ:RIDE) filed for bankruptcy protection earlier Tuesday while simultaneously announcing legal action against Taiwanese company Foxconn (TW:2354) over its alleged failure to invest up to $170 million.
Given the expense of building EVs from scratch, Lordstown planned to partner with Foxconn, with the giant manufacturer building the vehicles for Lordstown to sell.
Foxconn had invested just over $50 million in Lordstown as part of the deal, and currently holds a roughly 8.4% ownership stake.
However, Lordstown claims Foxconn has held back at making additional investments as promised, resulting in the EV maker running short of cash and struggling to ramp up production of its Endurance trucks.
The few trucks that the company assembled during the last few months had material costs that were “substantially higher than our selling price,” the EV maker said in a May regulatory filing.
5. ECB officials gather in Portugal
President Christine Lagarde, her European Central Bank colleagues and the rest of the world’s central banking elite have assembled in the Portuguese hillside resort of Sintra this week, the eurozone’s answer to the annual Jackson Hole Economic Symposium.
Inflation is likely to be the central topic under discussion, with this week set to provide new information about the sticky nature of prices on both sides of the Atlantic.
Another interest rate increase by the ECB in July is cemented in, having already lifted borrowing costs by 400 basis points since last year’s turnout in Sintra.
And further hikes may well be necessary, said Gita Gopinath, the International Monetary Fund’s deputy managing director, as she opened the conference on Monday.
“Inflation is taking too long to get back to target,” she said. “This means that central banks, including the ECB, must remain committed to fighting inflation despite risks of weaker economic growth.”
Lagarde agreed, saying earlier Tuesday, that “inflation in the euro area is too high and is set to remain so for too long.”