Equities higher as China GDP slows

21 January, 2019

Investor appetite to risk remains on the rise today, with equities in green across Asian markets. The slowdown in China’s economy will not impact this sentiment much unless a negative update on U.S.– China trade negotiations is received. Although U.S. President Donald Trump denied reports indicating that U.S. tariffs on Chinese exports would be lifted, he said over the weekend that there has been progress towards a deal with China. Despite the complex situation, it seems markets are tending to believe that negotiations are moving in the right direction and this is likely to provide further support to risk sentiment.

The release of Chinese GDP figures, which showed the economy has grown at its slowest pace in almost three decades, was not a surprise and this has been factored into asset prices. Fourth quarter GDP growth came in at 6.4% while full 2018 growth of 6.6% was slightly above Beijing’s target. U.S. trade tariffs have yet to deal direct significant impact to the country’s growth, however, the ongoing trade dispute is leading to a further slowing in consumer consumption and business capital expenditures. While China may continue to use its monetary and fiscal tools to offset the damage done by the trade conflict, there’s a limit on how much China may loosen policy given the swelling of its debt. It seems the only way for China to prevent a hard landing is to reach to a deal with the U.S., and that’s what the markets are hoping for.

Theresa May Plan B


UK Prime Minister Theresa May will unveil her Brexit “Plan B” to parliament later today after MPs rejected her initial “Plan A”. Her alternative plan is unlikely to differ much from the initial one and in the absence of any new information the UK may crash out of the EU on March 29. No one knows what will happen next, but the chances of a second referendum seem to be on the rise, as is an early general election. Traders need to be prepared for various outcomes, so expect Sterling moves to become more volatile in the days ahead.

Central Bank Meetings


The European Central Bank and Bank of Japan are both due to meet this week. No policy changes are expected from either, however updated guidance from ECB will move the Euro. Core Euro countries are experiencing sharp slowdowns. Germany and Italy may already be in a technical recession, and this is occurring as ECB ends its asset purchase program. The darkening economic outlook may put pressure on the ECB to keep interest rates at their current level for an extended period. If this is indeed the message from the ECB, the Euro may retest 2018 lows of around 1.12.


Source  
Crude Oil Daily: Bullish Activity on the rise11 May, 2020  

The price of Crude Oil, on the D1 time-frame, was in a lengthy downward spiral until April 21 when a lower bottom was recorded at 9.87. This extreme all-time low...

Is lightening set to strike twice for U.S. oil price?28 Apr, 2020  

Investors keeping their fingers crossed as hope builds following gradual steps from world governments to slowly loosen lockdown restrictions will eventually...

Darker mood awaits oil markets after WTI Crude collapse21 Apr, 2020  

WTI Crude has depreciated 7% today and more than 80% since the start of 2020. Prices are heavily bearish on the daily timeframe with the technical and fundamentals...


A raft of disappointing economic data16 Apr, 2020  

After climbing to a one month high on Tuesday, the S&P 500 declined 2.2% yesterday and more losses are set to follow today with futures indicating a lower open...

Oil restores gains as OPEC+ set for emergency meeting3 Apr, 2020  

Brent futures erased earlier losses on Friday amid reports that OPEC+ is set to hold an emergency virtual meeting on Monday to stabilise global markets...

Volatile quarter comes to an end31 Mar, 2020  

It has been an historic and volatile trading quarter defined by the novel coronavirus outbreak, with unprecedented central bank intervention, government...


You wouldn't catch a falling knife11 Mar, 2020  

Monday 9 March 2020 will forever be remembered as a dark day for global financial markets and only investors with an extreme high appetite towards...

OPEC agrees on large output cut6 Mar, 2020  

The run-up to the OPEC meeting on Thursday was rather anti-climatic with Oil barely moving despite the cartel proposing deeper production cuts...

Asset correlations not making sense20 Feb, 2020  

US and European equities are at record levels and US Treasuries are trading close to their October highs; meanwhile, gold prices have climbed to a new...