The European economy was not surprised but was rather contented when the Chinese GDP data for the second quarter came out. The GDP report showed the slowest growth in China since the 2008- 2009 recession.  The European stocks saw a higher opening today with the news which was expected to be worse. The news could have brought a certain relief for the Europeans but did not do the same for the Asian market. The news could not spur rally in Asian stocks even though it saw a higher opening.

China’s GDP stood at a 7.6 % for the second quarter. This has been the weakest performance of the world’s second largest economy since the recessionary years of 2008 and 2009. In the first quarter of the year, China's economy grew 8.1 per cent from a year earlier. The market was expecting a more aggressive stimulus to be coming their way to stimulate the Chinese economy but only saw the PBC (People’s Bank of China) cutting down the interest rates for the second time in the year. China's benchmark lending rates will be lowered by 31 basis points to 6 percent, and deposit rates will be cut by 25 basis points to 3 percent, the PBC said in a statement on its website. However the GDP is just one indicator that has shown a downward slope of China.

Other indicators such as loan growth, fixed asset investment, household consumption of gasoline and power output indicate a positive turnaround for the economy. Nomura’s Chief China Economist Zhiwei Zhang analyzed these indicators that show strength ahead for China’s growth in the future. With these indicators showing positive signals Zhang believes that China’s overall GDP for the year could settle around 8.4%.

With these mixed indications showing both positive and negative outlook of the economy traders will have a hard time predicting the prices for the commodities. A downward trend in the GDP of china could bring down the oil prices and industrial commodities like copper sharply. Nevertheless the positive indicators could also push up the prices same time. Only time will tell what the future beholds.

Note: The blog is just an expression of the author’s opinion and cannot be deemed responsible for any losses incurred.