Economic recovery stutters!
The economic data that China presented at the start of the week does not necessarily give hope for a rapid increase in economic development. Industrial production and retail sales also fell short of expectations. The interest rate cut was somewhat unexpected. The Chinese central bank is showing that it is aware of the upswing that has not yet been expected. After the opening of Shanghai after the corona-related lockdown, there was great hope that the economy would regain a foothold. However, the data so far has been disappointing, which means that China as a “global economic stimulus” is likely to continue to fail for the time being! After all, China should not deviate from its uncompromising corona policy before the party congress in November, which repeatedly leads to dampeners in economic development. Last but not least, the crisis is also leaving its mark on Chinese property developers. The resulting decline in demand for raw materials should cause prices to fall further for the time being.
Strong dependency causes problems
Companies that are very active in the Chinese market are therefore likely to remain under pressure. In this country, the focus in this regard is on the car manufacturers. But the price of oil also continued to fall at the start of the week, which can also be attributed to China’s sluggish economic development. Overall, the “black gold” could remain under pressure for the time being, as the price is currently developing further sell signals. A short- to medium-term setback of around 15 percent is therefore not unlikely. However, this should not really make itself felt at the gas station in this country, since the euro is also likely to continue to plummet. Here, for the first time in 20 years, prices below parity are possible again!
Stephan Feuerstein is Editor-in-Chief of the market letter Leverage Certificates Trader. Since the early 1990s he has been dealing with the subject of the stock market, specifically technical analysis. Information: www.hebelzertifikate-trader.de The above text reflects the opinion of the respective columnist. finanzen.net GmbH assumes no responsibility for its correctness and excludes any claims for recourse.