China GDP Preview – Australian Dollar, S&P 500, Emerging Markets, Trade Wars
- China’s economy is expected to slow in the third quarter as global growth weakens
- Immediate response may result in Australian Dollar[1] decline, reversing recent gains
- Long-term carries consequences S&P 500[2], emerging markets as selloff may resume
Join our Chinese GDP data live webinar coverage[3] as we cover its impact on the Australian Dollar and stocks (Begins 10/19 at 01:45 GMT)
Early Friday morning on October 19th, China’s third quarter GDP data, along with other key measures of domestic economic performance, will cross the wires. It could carry immediate and lasting consequences for FX and stock markets. Compared to Q2, economic growth is expected to slow to 6.6% y/y from 6.7%. Industrial production is also anticipated to weaken to 6.0% from 6.1% while retail sales remains unchanged.
According to the Citigroup Economic Surprise Index, Chinese data has been tending to underperform relative to economists’ expectations since June. Albeit, this has been by a shrinking margin since then. Still, this does open the door to a downside surprise as it seems forecasts have been too optimistic as of late. If GDP does slow to 6.6% or beyond, this would be the weakest reading since Q1 2009 which was 6.4%.
This would also follow the trend of weakening global growth, excluding the United States as of Q2 2018, that has been a pattern in most developed nations when looking at the chart below. This comes at a time when credit conditions are broadly tightening thanks to the Federal Reserve,
