Europe open: Shares in cautious start as China GDP target disappoints

European shares made a cautious positive start on Monday, taking their cue from Asian markets, despite a fall in Chinese stocks after the country set a modest economic growth target for this year.

The pan-European Stoxx 600 index was up 0.22% with little corporate news to drive sentiment. China set an economic growth target of around 5% at its National People's Congress, towards the lower end of expectations. The news hit miners, for whom Beijing is a major customer, with Anglo American, Antofagasta, Rio Tinto and Glencore all lower.

‘’Financial markets are set for some choppy trade early this week as investors search for a fresh sense of direction, after Friday’s Wall Street exuberance collides with disappointment over China’s growth ambitions,” said Hargreaves Lansdown analyst Susannah Streeter.

“It’s clear that a return to stability is Beijing’s main aim, rather than big expansionary plans, after the painful past few years. The 5% target for growth announced was not as high as had been hoped, particularly given the recent resurgence in factory activity and business confidence, indicating there is reticence towards signing off any blockbuster stimulus plans any time soon.”

“This will nudge down hopes that China could provide the extra steam to offset declines in other major economies, prompted by efforts to rein in rampant inflation. The exception appears to be for defence which will see budgets increased by more than 7%, but rather than being encouraging this development will be tinged with worries about heightened geopolitical risk.”

Investors will also be eying US payroll data on Friday after February’s blowout number sparked fears that the Federal Reserve might raise interest rates for longer.

Fed Chief Jerome Powell also holds his two-day testimony before Congress on Tuesday and Wednesday.

In equity news, Credit Suisse shares fell after Harris Associates, one of the Swiss bank's major shareholders, announced it had sold its stake over the past few months.

B&Q owner Kingfisher and Tesco rallied after an upgrade to ‘buy’ from ‘hold’ at Jefferies, while B&M European Value Retail was higher after an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets.

Shipping services company Clarkson gained after it reported a sharp rise in annual earnings, driven by a strong performance in its broking division. Pre-tax profit for the 2022 calendar year came in at £100.1m, compared with £69.1m a year earlier. The total dividend was lifted to 93p a share from 84p.

Reporting by Frank Prenesti for Sharecast.com