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Asian Markets Mixed as China GDP Beats Expectations; Trump Inauguration Looms

Asian Markets Mixed as China GDP Beats Expectations; Trump Inauguration Looms

Oliver Morrison, Analyst

Talking Points:

- China GDP rises 6.8%, above estimates of 6.7 increase

-Full-year GDP is slowest since 1990, but within the government’s target range

-Asian markets cautious ahead of Trump inauguration speech

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

China’s GDP grew 6.7% for the full year in 2016 and at an annual rate of 6.8% in the three months to December in real terms, down from 6.9% in Q4 2015, beating estimates of a 6.7% rise in Q4. China’s full-year growth still sits comfortably within the government’s target range of 6.5-7%, despite 2016’s figure being the slowest full-year growth figure since 1990.

Other data released overnight by the world’s second largest economy were mixed. Retail sales beat estimates rising 10.9% year-on-year in December (vs. 10.7% expected) against the 10.8% rise in November. Chinese industrial production, however, slipped two-tenths to 6.0% y-o-y (vs. 6.1% expected). Fixed asset investment also missed estimates, rising 8.1% y-o-y for the full year (vs. 8.3% expected).

Chinese equites rose in response, with the Shanghai Composite and CSI 300 gaining 0.54% and 0.69% respectively. However, much of that may well have been down to a Bloomberg report suggesting that the China Financial Futures Exchange is to relax curbs on trading. Reactions were more mixed in Asia. Japan’s Nikkei 225 gained 0.14%; the Hang Seng in Hong Kong dropped 0.58%. In South Korea, the Kospi fell 0.19%, and Australia’s ASX was dropped 0.58%.

USD/CNH gained, and currently trades at 6.85770. Much of that can be blamed on the caution in Asian markets ahead of today’s inauguration speech by US President-elect Donald Trump, who has promised to raise tariffs on Chinese goods after he takes office.

Economists also suggest that China’s temporary upturn is unlikely to last, and argue the imbalances in the economy are all too obvious as the country attempts to overhaul is state-dominated economy to become more of a consumption based economy over one reliant on exports. But a US raise in tariffs – if Trump is consistent with his promises – still threatens millions of Chinese jobs.

USD/CNH 15-Minute Chart

Asian Markets Mixed as China GDP Beats Expectations; Trump Inauguration Looms

--- Written by Oliver Morrison, Analyst

To contact Oliver, email him at oliver.morrison@ig.com

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