Chinese stocks fall, US durable goods orders rebound

Stocks in China fell sharply on Wednesday. Bloomberg reports:

China’s stocks fell the most in four months after Societe Generale SA said Chinese corporate profits won’t grow at all this year and the nation’s largest copper producer reported slumping earnings...

The Shanghai Composite Index fell 62.3 points, or 2.7 percent, to 2,284.88 at the close, its biggest drop since Nov. 30. The CSI 300 Index declined 2.8 percent to 2,474.90...

Industrial companies posted their first January-February profit decline since 2009, as net income dropped 5.2 percent from a year earlier to 606 billion yuan ($96 billion), the National Bureau of Statistics said yesterday. That compared with a 34.3 percent gain in the first two months of 2011.

The industrial profit figures suggest 2012 consensus earnings estimates for Hong Kong-listed Chinese companies are “far too optimistic,” Societe Generale strategists Guy Stear and Anthony Lee wrote in a note to clients dated yesterday...

There was minimal impact on stock markets elsewhere though. The S&P 500 also fell on Wednesday but by just 0.5 percent.

Sentiment in US markets on Wednesday was not helped by weaker-than-expected economic data. US durable goods orders rose 2.2 percent in February, rebounding only partially from the 3.6 percent decline in January. Orders excluding transportation equipment increased 1.6 percent while orders for non-defense capital goods excluding aircraft increased 1.2 percent.

Meanwhile, fourth quarter economic growth in the UK has been revised down to -0.3 percent from -0.2 percent but French growth was confirmed at 0.2 percent.

There were some encouraging data from the euro area. In Italy, an index of manufacturing sentiment rose to 92.1 in March from 91.7 in February while in Germany, the inflation rate eased to 2.3 percent in March from 2.5 percent in February.

A report from the European Central Bank on Wednesday provided only a mixed picture of monetary developments in the euro area though. The report showed that M3 money supply growth accelerated to a 2.8 percent annual rate in February from 2.5 percent in January. However, loans to the private sector grew at a 0.7 percent annual rate in February, down from 1.1 percent in January.