2020-06-24 • Updated
China was the first country that entered the coronavirus crisis, that’s why it should be the first out. However, the recent resurgence of new infections in Beijing made some investors worry about the second round of downturn. Today new virus cases decreased sharply. Let’s see how economists changed their predictions for the China’s rebound.
Most analysts upgraded their projections for the Chinese economic growth. They increased their forecast for GDP from 1.2% to 1.5% in the second quarter from a year earlier, according to the Bloomberg’s survey. Aidan Yao, senior economist at AXA SA in Hong Kong, said:
“With industrial production and services output both resuming growth, we now expect a positive GDP growth print for the second quarter”.
It seemed that the second largest economy may avoid the full-year recession after the historic contraction by 6.8% in the first quarter.
However, not every analyst has so optimistic prospects. The main reason of concerns is the reduced consumption. Many people lost their jobs and others had pay cuts. It will take a lot of time for most people to find new jobs. The central bank assured that it would expand its support measures to boost the domestic demand. It would offer interest-payment holidays and more credits to businesses. Moreover, economists anticipate that the People’s Bank of China will extend benefits for banks: decrease reserve ratios to 11.5% from 12.5%. However, it may be not sufficient enough. According to CBB International, most significant indicators of economic health such as manufacturing outputs, capital expenditures and retail sales are still well below pre-crisis levels. At the same time, Bloomberg strategists are confident that the industrial output and fixed-asset investments will grow in the next quarter.
Since the Chinese economy is the second-largest world economy, investors will look closely at the speed of Chinese recovery to understand how much time it will take for the global economy to return to pre-crisis levels. Moreover, the US dollar has shown the recent downward trend. The combination of growing Chinese economy and the weak US dollar will push the Chinese yuan upward.
The USD/CNH has been declining sharply since the end of May and set a strong bearish trend. Then, it entered the horizontal corridor in a range between 7.0525 and 7.0920 at the beginning of June. Most analysts have bearish prospects for this pair. The move below the support at 7.0525 will push the price even lower to 7.045 where the 200-day moving average lies. Otherwise, if the price crosses the resistance at 7.0920, it may jump to 7.100 at the 50-day moving average. Follow news further and join the market momentum!
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The EUR/USD pair is making gains, approaching multi-month highs around 1.0960, driven by a weakened USD and Christine Lagarde's somewhat hawkish remarks before the European Parliament. Minor housing data from the U.S., specifically New Home Sales for October, came in below expectations but didn't significantly impact the pair. Lagarde, President of the...
Global equities on Wall Street experienced a mixed session following the Thanksgiving holiday, heading for the most significant one-month rally since November 2020. MSCI's global shares index slightly eased but was still on track for an 8.5% monthly gain, fueled by growing investor confidence that U.S. interest rates...
Brent crude futures is maintaining stability this Friday, with traders awaiting an OPEC+ meeting that might lead to further supply cuts. Brent crude was down 8 cents at $81.34 a barrel, following a 0.7% drop in the previous session.
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