China Q3 GDP beats estimates coming in at 6.9% y/y

Monday, October 19, 2015

China’s third quarter GDP managed to beat analyst expectations as data released overnight saw the economy expand at 6.9% y/y, slightly better than the 6.8% y/y expected. While growth tempered slightly from the Q2 figure of 7.0% y/y the stable growth outlook suggest Beijing’s attempts to prop up the Chinese economy are steadily making progress. Retail sales bolstered this view, increasing by 10.9% on a year-on-year basis in September, slightly better than the previous month’s reading of 10.8% y/y. However, a cautious outlook dominated equity markets after industrial production data showed a slight moderation in September activity as it slipped to 5.7% y/y from 6.1% y/y the previous month. Mainland Chinese stock indices spent the first half of the overnight session trading tentatively in positive territory before swinging to modest losses towards the close.

While growth in the Chinese economy continues to moderate investors owe thanks to policymakers in Beijing and the PBOC for improving liquidity conditions and their continued effort to bolster capital markets. Emerging markets traded with significant volatility throughout the third quarter as concerns of a bubble in Chinese equity markets saw investors pull out en masse. The PBOC have cut interest rates five times since November last year while simultaneously boosting infrastructure spending in an effort to kick start the economy but industrial and manufacturing production have struggled to respond to their efforts and the LME base metals complex was decidedly mute during early hours trading as investors approached risk assets with caution.

In a sign that the overall mood is becoming more bullish for risk assets, spot gold prices were on track to close lower for the third straight session after breaching support at the 200 day MA during overnight trading. Prices for the yellow metal attempted to push back towards $1,180/oz but were unable to recover any of Friday’s losses and subsequently traded back towards $1,170/oz early on. After adding as much as 6.8% so far this month and rallying to a four month high towards $1,191/oz late last week, momentum seems to have turned and we could see spot prices test previous support towards $1,150/oz.  

China Q3 GDP beats expectations

CNGDPYOY Index China GDP Consta 2015 10 19 07 56 32

Industrial production slips back below  6.0%

CHVAIOY Index China Value Added 2015 10 19 08 01 02

Spot gold prices pare recent gains

XAU Curncy Gold Spot Oz D 2015 10 19 08 16 10

Events for today

0600

JP

Aug

Industrial Production

1330

US

Oct

NY Fed Manufacturing

1330

US

Sep

CPI

1330

US

w/e

Jobless Claims

1500

US

Oct

Philly Fed business index

1530

US

w/e

EIA Nat Gas

OE: 

Nov  Sugar (NYBOT) 

Topics: GDP, Gold, LME
More from: Kash Kamal