Economy expands 6.4% in Q4
The much-awaited China GDP numbers for the fourth quarter failed to spark too much excitement as both the quarterly and annual growth came in as expected. The economy grew 1.5% q/q and 6.4% y/y. The annual growth was slower than Q3’s 6.5%, and was the slowest since the global financial crisis. For the full year, the economy expanded 6.6%, the slowest expansion in 28 years, but above the official GDP target of about 6.5%.
In comments accompanying the release of the data, China’s National Bureau of Statistics highlighted that China had contributed almost 30% to global growth in 2018, despite complicated international and economic conditions. It also said the US-China trade war had impacted the Chinese economy, but it was manageable. Officials remain confident of achieving “reasonable growth” in 2019.
Other data better than expected
Overshadowed by the GDP numbers, China also released Retail Sales and industrial production data for December. Retail sales matched estimates with an 8.2% gain while industrial production was better, rising 5.7% y/y, accelerating from November’s +5.4% rather than the slowdown to +5.3% that had been expected by economists.
Aussie pops higher
The Australian dollar has a quick, kneejerk reaction after the data, with AUD/USD reaching 0.7184, though the pair failed to test the convergence of the 100-and 200-hour moving averages at 0.7186. The FX pair has since settled back to being almost flat on the day around 0.7169.
AUD/USD Hourly Chart
Equity markets had been trading negative from the start of trading today, reflecting the lack of progress in solving the US government shutdown after Trump’s proposal was rejected by both parties. The China data helped stabilize prices and pulled most indices off their intra-day lows. The Japan225 index was the worst performer, dropping 0.97%, while the China50 index outperformed, gaining 0.06%.
Asia Open: What to watch this week
US holiday may slow activity
Now that the China data is out of the way, it’s a bit of a slow day on the data front. The US has a bank holiday for Martin Luther King’s birthday and there are only German producer prices for December scheduled. These are seen falling 0.1% m/m, the first decline in five months, which may easing any pressure there might have been on the ECB to think about hiking rates earlier.
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