Risk Assets Missed the Jump on China’s Retail Sales and GDP

Yesterday we saw a strong rebound in the Chinese GDP and retail sales as the country reopens, but indices and commodities were unimpressed

Skerdian Meta•Wednesday, April 19, 2023•2 min read

We have seen some weak numbers from Chin in recent years, as they dragged the coronavirus measures for three years to reach the zero-covid policy. That has kept the sentiment soft for commodities and commodity dollars. Although with the reopening of the economy, traders have been looking at the economic numbers from China for clues on the direction.

Yesterday we got the first major round of data for Q1, which included the GDP, industrial production and retail sales. In March, retail sales jumped by 10.6% compared to the same period last year, exceeding expectations and reaching a nearly two-year high. This sector is a major contributor to China’s economic growth, and the strong performance indicates the release of pent-up consumer demand following successful COVID-19 containment measures.

This boost has provided significant support to the country’s economic recovery in Q1. The GDP number was also better than expected, at 4.5% against expectations of 4.0% and up from 2.9% in Q4 of 2022, indicating that the country’s economic rebound is gaining momentum. This means that consumption will continue to drive economic growth further ahead.

In addition, China’s factory output jumped by 3.9% during the same period, although that was slightly below expectations. However, there was positive news for the country’s airline industry as data from the China Aviation authorities showed a significant rebound, with more than 45 million air passenger trips taken in March. This represents almost three times the number of trips taken during the same period last year, indicating a strong recovery for the industry.

But, risk assets didn’t benefit much from all this. Stock markets in Europe and the US traded in a tight range during most of the day yesterday, while commodity dollars such as the NZD and AUD returned lower after a small jump in the European session. This is not a good sign, although traders are waiting for more clarity regarding the FED and the US economy.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.