Chinese industrial port. Image source: hxdyl © 123RF.com
According to the National Bureau of Statistics of China, the annualised GDP growth rate in the first quarter of 2020 shrank by 6.8 per cent, which is the first contraction since 1992.
The sharp tumble was prompted by the coronavirus pandemic, which caused massive lockdowns in China in the first months of the year, and also forced a virtual suspension of almost all industrial activity in the Chinese economic heartland in and around Hubei.
The 6.8 per cent slump in the growth rate is in stark contrast compared to the 6 per cent growth that was recorded the previous quarter, and it also missed the market expectations for a 6.5 per cent fall in the three months to March.
China q/y GDP Growth Rate. Image source: TradingEconomics.com
The worse-than-expected results outlined in NBS's report for Q1 of 2020 illustrate a deeper economic downturn than previously anticipated, which poses a more substantial challenge for the eventual recovery.
Nevertheless, there are Chinese and global economic systems put in place that can safeguard the gradual process of economic stabilisation.
As we showed in our ‘Market Update’ from the 15th of April, the Chinese balance of trade (BoT) data for the same period underscores the resilience of the global supply chains, which is a prerequisite for economic normalisation in China and elsewhere.
“The USD 7 billion trade deficit, which was incurred in January and February at the height of the COVID-19 crisis in China, has been thwarted in March, with better-than-expected import and export numbers. […] the moderately better-than-expected performance (regarding the BoT numbers) in the wake of the crisis gives investors a glimmer of hope for quick recovery. This happens as the Chinese industrial activity starts to normalise, and individuals return to their workplaces.”
More optimistic economists are now hoping for a V-Shaped recovery, which implies a snap throwback of the GDP growth rate into positive territory from the very next quarter, as the underlying economic activity is resumed after the lockdowns.
More sceptical specialists, however, argue that the underlying conditions, such as the markedly subdued global demand compared to the pre-crisis levels, are less favourable and cannot support a V-Shaped snap recovery.
Instead, they caution that a longer and more gradual recovery process would take place after the pandemic is over.
Due to such gloomier outlooks for global recovery, the Chinese Yuan continues to be pressured as international trade prospects remain feeble despite the demonstrated resilience of the supply chains.
The USDCNY broke out above the major resistance level (currently support) at 7.0634, and now looks set to complete the 1-5 impulse wave pattern.
USDCNY 1D Price Chart. Image source: Trendsharks ©, created with TradingView.com
Over the past few weeks, the USD has lost nearly 800 pips against the JPY, driven by Japan's shift away from decades of negative interest rates. With the Bank of Japan raising rates for the second time in a row, investors are adjusting their positions to [...]
Despite its volatility, Silver remains in an uptrend. While not as dynamic as Gold, XAG often mirrors XAU’s movements. A Multiple Top has formed around $32.50, and history shows that the more a level is tested, the weaker it becomes, increasing the likelihood of a [...]
A combination of factors, including Trump-era tariffs, the emergence of DeepSeek, and a slowdown in GDP growth, has contributed to the recent pullback in the US30 from its record highs. From a technical standpoint, a Double Top pattern has formed around the [...]
Over the past month, Silver has experienced an impressive 13% surge, marking a strong bullish trend. Despite notable volatility and multiple pullbacks, the overall momentum remains firmly to the upside. This strength is further validated by the Golden Cross, a historically reliable [...]
The Swiss Stock Market has been on a remarkable rally, surging over 15% between December and January. At times, the price action resembled a near-vertical ascent. However, following the announcement of Trump’s tariffs over the weekend, Monday’s trading session opened with a [...]
Between October and January, GBPUSD experienced a significant decline, dropping by approximately 1300 pips. However, we now observe signs of a potential trend reversal. Over the past few weeks, the pair has rebounded by more than 400 pips, shifting momentum toward a [...]
For the past 1 month, the UK100 saw a fantastic 600 point rally! The occasional corrections only attracted more buyers, which is healthy for the current up trend and the RSI currently exhibits elevated demand. A 130 point correction started last week on Friday, dipped below the [...]
Over the past two weeks, Japan’s leading stock index surged 2,000 points, reflecting strong bullish momentum. However, this week saw a sharp sell-off, erasing nearly all gains since mid-January. Despite this drop, the decline stalled at the 61.8% Fibonacci retracement, a key [...]
There is a clear shift in the momentum in the Oil market, with the commodity dropping with nearly 10% for the past 2 weeks. The Death Cross, a classic sell signal, is indicating that sellers are indeed in control and we are lookin now at a strong [...]
The 350 pip rally for the past 2 weeks seems like a trend reversal for EURUSD, with buyers back in control. The strong bullish momentum is also confirmed by the Golden Cross, a historic buy signal. Corrections are healthy for the trend and we currently looking at [...]
For the past 2 weeks GBPUSD went up with 400 pips and this is why we believe we might be looking at a trend reversal. The strong bullish momentum is confirmed by the Golden Cross, a classic buy signal, which supports the hypothesis that [...]
The Death Cross formation in USDJPY signals a robust downward momentum, with the USD depreciating by 300 pips over recent weeks. Further declines exceeding 300 pips are anticipated, potentially reaching the 152.00 level. Despite several corrective pullbacks, the price has been unable to surpass the [...]
Following the formation of a Double Top pattern at the 21,930 level last Friday, the NASDAQ has experienced a significant decline, plummeting by nearly 800 points. This downturn has been primarily driven by unfavorable manufacturing data emerging from China, alongside the Bank of Japan's interest rate hike on Friday. The market reaction closely resembles the [...]
GOLD's uptrend has regained strength, with several factors supporting further gains. The RSI bounced from oversold levels and now stands at 65, signaling growing demand and increasing buying volume. Additionally, the appearance of a [...]
For the past few months, USDJPY gained 2100 pips! Then, about 10 days ago the USD started dropping and so far corrected with 300 pips, dropping down to 155.00. A local Double Bottom got formed and this level also aligns with the important [...]
For the past week, the US100 has surged by over 1,000 points, signaling strong bullish momentum. The RSI stands at 69, indicating high demand and buyer dominance. A bullish Golden Cross pattern has emerged, confirming the upward trend. Despite a brief correction yesterday, with the index dipping to [...]
The Descending Triangle on the 4-hour chart, typically a bearish signal, failed to materialize this time. Instead, the Triple Bottom support at 92,000 held strong, driving significant buying volume. A Golden Cross—a classic bullish indicator—confirms strong [...]
After a 300-point correction from its December highs, the SP500 appears to be rebounding as bulls regain control. This recovery is supported by positive economic data, including strong NFP numbers, low unemployment, and CPI readings meeting expectations—all favorable for stocks. Additionally, the earnings season began yesterday with [...]
For several months, the EUR has been trending downward, losing hundreds of pips. While occasional corrections to the upside occur, bears remain in control. The strong downward momentum is highlighted by the Death Cross pattern, a classic sell signal. Yesterday, we observed another [...]
The Dollar remains strong, with buyers firmly in control since the Fed's December comments hinting at fewer 2025 rate cuts. This drove a 400-pip rally in USDCAD, now facing resistance near 1.4450 as early buyers take profit. Corrections are part of healthy trends, and the pair is testing support at [...]
