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CPI & PPI Fall Again
Further signs that the Chinese economy is in trouble were seen overnight with the latest CPI reading marking the fastest decline in 15 years. CPI printed -0.8% last month, down from -0.3% prior and below the -0.5% the market was looking for. The data marks the biggest drop since 2009 and underscores the deflationary risks threatening the country’s economy. Along with the fall in CPI, PPI was seen falling 2.5%, marking its 16th consecutive monthly fall.
Xi Meeting Regulators
The data is the latest in a string of readings reflecting the poor health of the economy. The Chinese government has taken steps recently to help buffer activity, including specific stock market stimulus aimed at reversing falling prices. However, efforts so far have proved to have short-lived impact. Xi is now reportedly talking with regulators today with traders hopeful that further measures will be taken on the back of the meeting.
Chinese Stocks Rallying
Despite the negative data, Chinese stocks are rallying hard today as traders anticipate fresh stimulus efforts to come in the near-term. Some measures are already being announced with state owned Central Huijin Investment Ltd noting that it will buy more ETFs. With more measures to come, the current recovery rally looks likely to continue for now.
Technical Views
Shanghai Composite
The rally in the SHCOMP has seen the index trading back up to retest the broken 2022 lows around 2867.1980. This is a major pivot for the market, with the bear channel highs here also. If bulls can breakout here this opens the way for a run up to 2928.8391 next with 3043.1853 above as a bigger target.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.