Chinese Economy At Slowest Pace Since Early 1990s
Danske Markets | Jul 15, 2019 04:19AM ET
- It is a quiet day on the data release front. A speech by Fed's William (voter, neutral) ahead of the crucial Fed meeting at the end of July will be in focus. The market is looking for hints on how forceful the Fed's rate cut will be (25 or 50bp cut). There are set to be more speeches by Fed board members later this week.
- In the UK, the leadership contest in the conservative party is heating up ahead of the vote on who should become the next leader of the country. Focus is on the extent to which Boris Johnson can force through a no-Brexit deal by suspending the Parliament.
- Later this week, US confidence indicators such as the Philly Fed index will provide fresh signs about the strength of the US companies in July.
Asian equities are mixed this morning as China's economic releases showed that the Chinese economy slowed to the weakest pace since the early 1990s amid the ongoing trade standoff with the US. Real GDP growth slowed to 6.2% y/y in the second quarter. Meanwhile, industrial production in June expanded by 6.3%, stronger than expected by financial market analysts and faster than in May, indicating that a stabilisation is emerging amid the impact of loosening monetary conditions, evident from Friday's monetary numbers. In addition, fixed assets investments were stronger than expected in June.
On Friday, US President Trump criticised China for not purchasing enough US agricultural products as agreed at the G20 meeting in Japan earlier this month. The comment underscores the challenges in finding an agreement between the two sides amid considerable distrust between the two sides. Furthermore, Trump is probably encouraged by the buoyant US stock market, where the S&P 500 broke through the 3000 level for the first time last week.
The Turkish lira is under pressure this morning following Fitch's decision to cut Turkey's sovereign further to Junk over the weekend. Fitch reduced the nation's long-term foreign currency debt rating to BB-, three notches below investment grade and on par with Brazil, Greece and Bangladesh. The ratings company warned of deteriorating institutional independence and economic policy credibility after President Recep Tayyip Erdogan unexpectedly removed Cetinkaya as his central bank chief last week. On top of the concerns of institutional independence in the country, there is a looming risk of tightening US sanctions, as the delivery of parts of a Russian missile system is taking place, which has been sharply criticized by the US. We expect the Turkish Lira to weaken in the coming months against the USD.
Key figures and events
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.