By Greg Peel

The Dow closed down 14 points or 0.1% while the S&P lost 0.4% to 1364 and the Nasdaq lost 0.9%.

At the annual meeting of the National People's Congress in Beijing last night, Chinese premier Wen Jiabao announced a new government target for GDP growth of 7.5%, down from 8.0% last year. The downgrade reflected Beijing's desire to turn more inward and concentrate on growing an domestic economy of high quality in the face of weaker demand from its once largest export customer, Europe.

The announcement hit the wires at 10am New York and sparked a plunge on Wall Street which saw the Dow move from little changed to down 94 points in a blink. Given there has not been a triple-digit down move in the Dow yet in 2012, it was quite a plunge, perhaps reflecting a lot of recent talk of a pullback being necessary. But realistically, just how scary an announcement is it?

The first point to make is that Beijing's target had been 8% growth for many years, yet never once has it been that low outside of five minutes of GFC impact. I say five minutes, because in response Beijing unleashed the world's largest ever fiscal stimulus package at that point, all paid out of surplus, and saved the world. Even with two solid years of fiscal tightening in 2010-11, Beijing failed to get even close to 8%, yet late last year the government started to ease monetary policy once more. Targets are all well and good, but reality is a different concept.

The second point to make is that there would not be an economist in the world shocked by this number. A slower China in 2012 and beyond has long been anticipated, so Wen's target is simple confirmation of Beijing's acknowledgment. Beijing might be easing policy again but the big fiscal package of 2008 is now history. The GFC shattered China's export markets, and while economies have improved since we are not likely to see pre-GFC global consumption levels again for perhaps a generation, while Europe is set for a long period of recession. China's big infrastructure investment drive has now peaked and has become a lot more selective, while the booming housing market has been well crimped.

Beijing set targets of 8% GDP growth before the GFC but still struggled to even get to single digits. That the government should cut to 7.5% in 2012 is not exactly worth panicking about.

And indeed, Wall Street didn't panic. The 10am plunge proved short and sharp and the indices did nothing other than trace a steady comeback thereafter to the bell, with volume again minimal.

Helping the turnaround was the US service sector PMI result for February, which showed an increase to a sizzling 57.3 from 56.8 in January. This contrasts to last week's manufacturing PMI result, which showed a bit of a slip to only just expansionary territory. It also contrasts with the rest of the world. All of Australia, China, the eurozone and UK saw lower service PMI results.

China's official result had been posted on the weekend and marked a slip into contraction at 48.4 from 52.9 previously. This result was not as bad as Australia's, where the services PMI fell out of bed to 46.7 from 51.9. The eurozone also slipped into contraction at 48.8 from 50.4, but no one was much surprised, while the UK managed to remain in expansion albeit at the lower level of 53.8, down from 56.8.

So it was a great result for the US, but a bit of a Barry for the rest of us.

Wall Street took the services result as a trigger to begin grafting back, just as it has done so often intraday in 2012. There's very little volume, the Dow can't seem to get over 13,000, but the buyers just keep plugging away on any dip. The Nasdaq was the hardest hit on the Chinese news last night, led by a big drop in the Apple share price. I wonder what 7.5% growth, if it gets that low, means for iThing sales in Shanghai compared to 8.0%?

Base metals didn't much like the Chinese news, and fell 1-2% with a 3% fall in tin. Oil has other things to worry about, so Brent rose US23c to US$123.99/bbl and West Texas rose US30c to US$107.00/bbl.

The US dollar index slipped back a little to 79.30 but that didn't stop gold falling another US$5.80 to US$1706.00/oz, while the Aussie risk indicator cum China proxy fell half a cent to US$1.0672.

I haven't mentioned US bonds for a while now or the VIX, mainly because they're not going anywhere much either. The US ten-years yield has been flitting about the 2.0% mark, while the VIX is hanging around 18. Stock markets, of course, are generally just hanging around as well.

The SPI Overnight was down 16 points or 0.4%.

Glenn will keep his weapon in its holster today at 2.30pm while the December quarter current account will provide clues as to how business is going with China, ahead of tomorrow's GDP result.

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