Photo - Andreas Zanin
Andreas Zanin
Analysis, Market Analysis | January 17, 2024

JASPER’S MARKET SQUAWK 17-01-2024

USD Rises as China GDP Disappoints

Investors are left disappointed as China’s economic data signals a weak recovery, raising the urgency for further stimulus measures from Beijing. This underwhelming performance in China has sent ripples through global markets, triggering a risk-off sentiment.

Key Factors for Today

  1. China’s GDP growth for October-December came in at 5.2%, falling short of the 5.3% forecast, despite a slight improvement from Q3.
  2. Asian stock markets took a hit, with China’s blue-chip stocks at their lowest point in five years, as hawkish central bank rhetoric added to investor anxiety.
  3. Concerns about Red Sea attacks have revived worries over supply chain disruptions and geopolitical tensions, boosting the safe-haven appeal of the US dollar.

Chart of the Day

The trend in interest rates influences, directly or indirectly, all asset classes. But what about gold?

Source: Matteo Marchetti, KTM Market Analyst

For all the latest market developments follow Matteo @MMTradingKTM and Key to Markets @keytomarkets on Telegram

Biggest Stories

China’s economic woes persist as GDP growth for the fourth quarter falls short of expectations, signaling a sluggish recovery. The property crisis, deflationary pressures, and subdued consumer demand have plagued the nation’s economy throughout 2023, leading to increased calls for stimulus measures from Beijing. While the growth rate inched higher from Q3, it was not enough to match the Reuters poll forecast, leaving investors concerned about the country’s economic trajectory.

Investor sentiment took a hit following hawkish remarks from central bankers resisting early rate cuts. Asian stocks tumbled to a one-month low, reflecting market uncertainty. China’s blue-chip stocks experienced their lowest levels in half a decade, amplifying concerns about the country’s economic stability. The situation is further exacerbated by rising tensions in the Red Sea region, heightening fears of supply chain disruptions.

As investors seek refuge from market volatility, the US dollar has surged to a one-month high. The growing geopolitical concerns and supply chain disruptions have driven market participants towards safe-haven assets. The dollar’s strength in such an environment could impact global trade and currency markets.

European markets are expected to open lower, with particular attention on luxury stocks. The disappointing China data has raised questions about the performance of luxury brands heavily reliant on the Chinese market. Investors will closely monitor these stocks for potential market-moving developments.

Econ Calendar

  • UK CPI and PPI data.
  • Eurozone Inflation Data.
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