First China. Q2 GDP came in at +7.6% YoY, down from +8.1% in Q1. Whilst it is the lowest print since Q1 2009 and also marginally below market consensus (+7.7%) the final number is perhaps not as bad as some of the more bearish expectations out there. On a sequential basis the growth profile in Q2 (+1.8% QoQ) was a bit stronger, thanks to a downward revision to Q1's reading (down to +1.6% QoQ from +1.8% QoQ). DB's Chief China economist noted that based on his seasonal adjustment model GDP was only growing by around 6.5% in Q2. Given recent indications from the economy he thinks activities in the first half of Q3 will likely remain sluggish. June MA continues to call for 2-3 more RRR cuts and one more interest rate cut for the remainder of the year.
“Overall the report is being seen as relatively market friendly as the slowdown will probably add more pressure for authorities to offer more stimulus.” write Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank. Post data risk assets initially spiked higher before trimming some of those earlier gains. Indeed the Shanghai Composite hit an intraday high of +0.6% but is now flat on the day. Similarly Copper was up as much as +0.9% but is now just +0.5% on the day as we type. But broadly speaking Asian equities are still mostly higher on the day.