China Data Lifts Sentiment in Asia
Asian stock markets recovered in overnight trading on the back of better-than-expected economic data from the world’s second-largest economy, China.
Industry, investment, services and retail sales all showed growth, according to China’s official statistics.
The Asian giant contributes around 30 percent to global GDP growth and is a major driver of Asia’s economies. The Hang Seng Index and Nikkei rose on the latest macro-economic developments, signaling a lift in sentiment after recent COVID-19 outbreaks in Shenzhen.
Crude oil and natural gas spot prices slowed their rapid retreats from last week's highs as traders priced in the possibility that China’s growth will boost world GDP - and demand for fuel - in the short-to-medium term.
FOMC interest rate decision
All eyes are on the FOMC’s rate decision expected later today.
Spot gold prices remain under pressure as the inversely-correlated USD takes the safe-haven spotlight following high inflation rate numbers for February.
If the Federal Reserve raises its key interest rate by .25 basis points to .50 as widely expected, there could be knock-on effects for assets like gold, the USD currency pairs, the US Dollar Index and banking stocks.
What if the FOMC does not raise interest rates as expected?
Monetary policy makers are well aware that current inflation rates reflect extraordinary economic conditions amid the COVID-19 pandemic. Raising interest rates at a time of slower economic growth may increase the chances of defaults in the corporate and household sectors.
This means there is a slight chance that the Federal Reserve might choose to increase tapering quantitative easing (QE) instead of raising interest rates. In that case, the US stock markets could see support as the cost of borrowing and investing would remain at accommodative levels.
In other news, US retail sales numbers for February are expected today. At a macro-economic level, retail sales figures can influence expectations towards inflation, jobs and GDP growth. At the asset level, the USD and retail stocks may see movements depending on investor reactions to the numbers.
FAQ
What is quantitative easing (QE)?
Quantitative easing is a central bank's way of supporting the economy during downturns. QE is usually part of an overall strategy. The central bank buys assets like Treasuries and at the same time increases the monetary supply by lowering interest rate guidance.
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admiral Markets’ investment firms operating under the Admiral Markets trademark (hereinafter “Admiral Markets”) Before making any investment decisions please pay close attention to the following:
This is marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
With a view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for the prevention and management of conflicts of interest.
The Analysis is prepared by an independent news & economics analyst, Sarah Fenwick (financial writer), (hereinafter “Author”) based on their personal estimations.
Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
