Forex News – Markets show relief as China growth as expected
July 15, 2013 8:10 am
China’s second quarter growth was reported as expected by the country’s National Bureau of Statistics. The world’s second largest economy’s annual economic growth slowed to 7.5 percent from 7.7 percent, recording the second straight quarter of slower growth.
Currencies did not react negatively since this was already discounted by the markets. Many investors were even expecting more downside than forecasts, especially after dismal trade data published last week.
Driving growth lower was mainly due to a weakness in exports and its impact on investment and sentiment in manufacturing. Many see downside risk in the second half of 2013 (due to the interbank liquidity squeeze and a bunch of other concerns) and wonder if the nation will meet Chinese Premier Li’s 7.5 percent growth target.
Despite being a slowdown, this was in line with expectations and the degree of deceleration is probably still acceptable to the new leadership at the moment. As a result markets were happy.
Currencies did not react that much but equity markets rose. Hong Kong’s Hang Seng Index rose 0.4 percent while Australia’s ASX/200 Index ended up 0.2 percent.
China is Australia’s major trading partner so since the data was not as bad as expected, this helped support the aussie. After the GDP figures, the Aussie dollar stood 0.6 percent higher at $0.9116, off Friday’s low of $0.8997.
Meanwhile, other Chinese economic indicators released along with the GDP were mixed, with retail sales exceeding expectations but industrial output and fixed-asset investment coming in below market forecasts.
China’s second quarter growth was reported as expected by the country’s National Bureau of Statistics. The world’s second largest economy’s annual economic growth slowed to 7.5 percent from 7.7 percent, recording the second straight quarter of slower growth.
Currencies did not react negatively since this was already discounted by the markets. Many investors were even expecting more downside than forecasts, especially after dismal trade data published last week.
Driving growth lower was mainly due to a weakness in exports and its impact on investment and sentiment in manufacturing. Many see downside risk in the second half of 2013 (due to the interbank liquidity squeeze and a bunch of other concerns) and wonder if the nation will meet Chinese Premier Li’s 7.5 percent growth target.
Despite being a slowdown, this was in line with expectations and the degree of deceleration is probably still acceptable to the new leadership at the moment. As a result markets were happy.
Currencies did not react that much but equity markets rose. Hong Kong’s Hang Seng Index rose 0.4 percent while Australia’s ASX/200 Index ended up 0.2 percent.
China is Australia’s major trading partner so since the data was not as bad as expected, this helped support the aussie. After the GDP figures, the Aussie dollar stood 0.6 percent higher at $0.9116, off Friday’s low of $0.8997.
Meanwhile, other Chinese economic indicators released along with the GDP were mixed, with retail sales exceeding expectations but industrial output and fixed-asset investment coming in below market forecasts.
Related Posts: