China’s Q2 GDP slowing slowly

China’s Q2 GDP arrived matching the market’s expectation at 6.2% year-on-year (YoY) while the accompanying high frequency June numbers surprised on the upside, providing short-term relief for markets.

High frequency surprise

In line with the market’s consensus, China’s Q2 GDP turned up at 6.2% YoY, marking the slowest pace in 27 years. Alongside Q1’s 6.4%, H1’s growth had altogether slipped to 6.3%. This was as demand slipped both domestically and externally while trade tensions escalated in the period. Following the likes of the continued deterioration of inflation and trade numbers, the GDP print had perhaps been the latest to drive home the need for further support from the authorities. One that the market will certainly be watching going forth.

Source: Refinitiv

Notably, however, one would have seen the high frequency figures from June surprising on the upside. This includes both the industrial output and retail sales at 6.3% YoY and 9.8% YoY respectively. Policies in place since the start of the year, including the boost to infrastructure investment, appear to have been effective in helping to shore up the figures.

The above said, the longer-term outlook remains one that is uncertain as global growth is expected to slow down, thus dragging on demand while the resumption of the US-China trade continues to confound the markets in terms of a timeline. Fortunately, the ‘bad news is good news’ mentality continues to hold and is backed up by the authorities’ stance that the ‘counter-cyclical measures to support the economy will show more obvious results during the second half’ post the GDP release. Look to a convergence in trend between the Chinese market and its’ soaring US counterpart, with the former due to be lifted by the abovementioned support expected in both fiscal and monetary policies.

Bad news is good news

The CSI 300 was seen responding with an uptick post the release of the GDP data with some sense that the GDP number may have room to disappoint in the Q2 release. The obliteration of the scenario coupled with the surprise seen in the high frequency readings have altogether helped to see a retracement of the early morning losses. Look to continued gains here as told above, although a short-term head-and-shoulder pattern coupled with the bearish momentum does not bode well for an immediate upturn.

Source: IG Charts

Meanwhile for the offshore yuan, we are seeing a rather flatline trend against the greenback. USD/CNH may continue in this state of consolidation amid the prolonged uncertainty on US-China trade while the US Dollar Basket likewise show signs of rangebound trade amid the opposing forces of data and the Fed within the market.

Source: IG Charts

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.