Chinese GDP prints in line

<p>Today’s Chinese GDP numbers have printed in line with market consensus estimates of year on year growth at 7.6% for the second quarter of this […]</p>

Today’s Chinese GDP numbers have printed in line with market consensus estimates of year on year growth at 7.6% for the second quarter of this year. Our views haven’t changed, well documented upon the release of trade numbers out on Wednesday. We continue to see this as a turning point for the Chinese economy, with inflation now completely under control and the government ready to start stimulating demand. We think the third quarter will surprise on the upside the annualised rate finish off the year slightly above 8%. Again, we see no dooms day scenario for China and think Asian equities will see a mild improvement over the next few months from recent lows.

The focus next week is likely to shift to US reporting. We estimate just more than half of the S&P500 financials index will report their second quarter earnings numbers over the next week. Analysts have been trimming forecasts over the past few days so we don’t expect any large misses. We also don’t think there will be any large losses, or blow ups, like we saw with JP Morgan. Should the US financial emerge in reasonable shape, from an earnings perspective, this will provide support for the S&P500 and thus create somewhat of a floor for the rest of the names to report. It’s a big if, but we think the most likely scenario. Again, that will spill over into some good news for Asian markets. The next week will no doubt be a very interesting one.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.