Disappointing data for China fuels global economic fears

Today's Highlights

• Poor Chinese data deepens global slowdown gloom

• German Gross Domestic Product contraction mirrors UK’s

Current Market Overview

Disappointing data for China fuels global economic fears

A poor set of Chinese data overnight has added to the global economic woes and weakened the currencies of China’s supplier nations. Industrial production growth fell back to 4.8% - a 17 year low, their unemployment rate rose to 5.3%, retail sales slipped and investment slipped as well. The markets have clearly become used to declining Chinese data because there was little reaction.

Overnight news also included a recovery in consumer sentiment in Australia, according to the Westpac index.

Euro weakens on poor Gross Domestic Product data

The Euro is a tad weaker this morning after German Gross Domestic Product (GDP) contracted by 0.1% in Q2 after 0.4% growth in Q1. This almost mirrors the UK’s data and is probably attributable to the same stockpiling ahead of Brexit, plus some changes in the timing of public holidays. No doubt the continuing slowdown in China will have impacted exports to that behemoth of an economy. We have also seen consumer price deflation in France taking more of the shine off the Euro. The markets are expecting Q2 GDP growth to remain around 1.1% on the year for the Eurozone but, as Germany is such a major component of the Eurozone’s GDP, the actual figure may well disappoint. Be ready for that.

Positive economic data for UK today, but can it help the Pound?

Sterling still failed to strengthen significantly on positive consumer inflation data, even after a small uptick in the unemployment rate reported yesterday. Sterling was saved by the rise in wages growth yesterday, though. At 3.9% per annum, that wage growth, alongside such strong employment numbers, will boost the prospects for the consumer end of the UK economy as long as inflation remains around 2.0% or slightly lower. Today’s figure of 2.1% is positive, but may not be enough to boost Sterling much, thanks to Brexit fears, but it can’t hurt the Pound. Maybe a rise in Producer Price inflation will help, up from 1.6% in June to 1.8% in July.

US trade data expected today

This afternoon’s US data is confined to import and export numbers. That is unlikely to shift USD sentiment. With much larger factors in play, like the China and Middle East situations, we need political change to get any kind of USD change.

Have a great hump day everyone.