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EU Market Outlook - China's Result Seen as a Positive

Last updated 7/13/2012 1:20 AM EST (GMT -5) 0 Comments - Add your comment

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Andrew Taylor

Market Strategist, GFT

Follow @ATaylor_GFT

Top Headlines

o    China GDP prints at 7.6% as expected

o    Moodys downgrades Italian Government debt before today's auction

o    Asia provides positive leads

o    Market Moves:

·          AUD/USD above 1.0230; ASX2 00 & Nikkei finding support

·          Copper and WTI find friends to grind slowly higher

European markets will open higher following the positive sentiment supporting the Asian markets post Chinas GDP figures.

Prior to the announcement forecasts had been reduced to 7.6% with some economists seeing a sub 7% print a real possibility. This only added to the edginess leading into the figure which saw the world’s second largest economy declining in growth from 8.1% to 7.6%. Initially markets seemed unsure on which direction to take, as recent global economic figures have traders expecting the worst and this didn’t quite measure up.

Eventually traders began reducing their short risk asset positions simply because a catastrophe had been averted. This squaring of the books gained momentum taking out near term resistance levels particularly for the closely linked Australian markets.  

For now markets are relieved that this last remaining economic giant still has some fight in it left, and in fact, plans on using its capabilities to do something about it.

Outlook

For the session ahead, being able to hold onto this upbeat feel may be a big ask, as the continuous drip feed of negative news from Europe and the US will challenge even the most optimistic of punters. Moody’s downgraded Italy’s government bonds ahead of its 10 year auction today which should make it one to watch. However, with a recent sell off in risk assets a retracement is on the cards as traders reduce posi’s leading into the weekend.

Economic Events to watch:

N/A IT              10 Year Bond Auction

1230 US           Jun PPI

0055 US           Consumer Sentiment

For more intraday analysis and trade ideas, follow me on twitter @ATaylor_GFT

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About The Author

Andrew Taylor's financial markets career started in 1991 in the interbank FX market,where he worked for one of the largest banks in Australia. Andrew then went on to trade on behalf of some of the biggest global banks, working across five of the world's major financial hubs: Sydney, New York, Singapore, Auckland, and Tokyo.

His more than 20 years of experience spans market borders and asset classes, covering global equities, commodities, options and futures. Andrew's wealth of trading experience and ability to communicate with traders of all levels has put him in demand as a first point of contact for clients and the media alike when seeking information and guidance.