Chinese GDP Data Offers Mild Relief

Chinese GDP Data Offers Mild Relief

By Tim Waterer (Senior Trader, CMC Markets)

There was a minor sense of relief attached to the Chinse GDP result today, despite the result being in line with expectations. Some market participants had been bracing for a potentially worse result than the 7.5% growth rate particularly given the negative rumblings over Chinese growth in recent times. To see the number come in on par with the Chinese Government’s growth target offered mild comfort to risk assets today.

Resource stocks on the Australian market started to fare a little better once the Chinese growth figures came and went without incident, with the likes of BHP and RIO recovering from the morning lows. Across the market there was still an air of caution with traders mindful that the rate of growth in the world’s second largest economy still appears to be on the wane (compared to the previous GDP print of 7.7%).

The Australian Dollar made a tepid move above the $US0.91 level today once the ‘event risk’ associated with the Chinese GDP had passed. While 7.5% GDP was a reasonable result, there was still some cause for concern among the other Chinese indicators released today with Industrial Production and Fixed Asset Investment numbers coming in shy of the forecast. This capped the upside potential of the AUD during today’s session.

Overall, the raft of Chinese economic indicators appear to have been given a ‘pass’ mark by investors today, if only just. Over coming days traders will now turn their attention to the US to see whether Bernanke wears his hawkish or dovish cap when giving testimony to Congress later in the week.

ENDS

© Scoop Media