Asia braces for China data

Risk trades may not materialise in early Asia today as investors brace for a swathe of Chinese data at 10:00 SGT today.

China Databoard
Source: Bloomberg

US markets were still closed yesterday for Martin Luther King day, while European indices remained sluggish.

There is a potential for a bounce in market sentiment, only if the actual reading outperformed the estimates. I don’t see much chances for a significant upside surprise. The consensus is for GDP for Q4 and 2015 to come in at 6.9%.

Recall that President Li Keqiang said during the opening of the Asian Infrastructure Investment Bank a few days ago that China’s economy grew at about 7% last year. So the forecast is in line with the President’s words. Meanwhile, December numbers for industrial production, retail sales, and fixed urban assets will also be released alongside the GDP figures

In an attempt to ease fears of more yuan devaluation, the President also said that Beijing does not intend to use a cheaper yuan to boost exports. However, any evidence of fresh weaker yuan fixing would doubtlessly pull the markets into a ‘currency war’ overdrive. Who said that the markets are rational in the short term?

Furthermore, if it is the will of the markets to push yuan lower, then propping up the currency to keep it stable will cost too much, even for China with multi-trillion dollar reserves. A cushioned or stepped decline for the CNY is the likely scenario.

Overall, market players will exhibit a dollop of caution today. From my point of view, any rallies on any China outperformance will be quite limited and temporary. The Shanghai Composite remains below the key 3000 points, although yesterday’s positive close was a relief for punters.



  • Asian stock index futures showed mixed performance, underscoring the jittery mood, as US markets were closed on Monday. European indices ended lower. Stoxx Europe 600 closed down -0.4%.


  • Brent fell deeper below $30, validating analysts’ projections that we could see $20 oil. The European benchmark crude fell as low as $28.55, bring year-to-date losses to 23.4%. Out of 11 sessions so far this year, only one session closed in gains. Iran’s oil ministry instructed to raise output by 500,000 barrels a day after international sanctions were abolished. But OPEC expects a deeper drop in oil supplies this year as low crude prices squeezed US and Canadian oil producers. They expect non-OPEC supply to shrink by 660,000 barrels a day this year, compared to previous estimates of 270,000.


  • Research from Rystad Energy showed that at the current oil price, Saudi Arabia, Kuwait and Iraq are still able to make profits, where their costs are around $10 or less. However IMF warned that they could run out of cash within five years if oil prices doesn’t move back above $50. In the US and Canada, production costs are $36 and $41 a barrel respectively. It’s even higher in Brazil at nearly $49.



*For more timely quips, you may wish to follow me on twitter at

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.