Chinese Q3 GDP Slows, But Meets Expectations

October 18, 2012 01:21 AM

What Traders are Talking About:

* Chinese Q3 GDP falls, but in line with expectations. China's GDP rose 7.4% from year-ago in the third quarter, which marked the seventh consecutive month of slowed economic growth and was the slowest growth rate since the first quarter of 2009. But the GDP figure was in line with expectations and cumulative growth through the first three quarters of this year stands at 7.7%, which is above the annual government target of 7.5% growth. Plus, industrial output, retail sales and investment data were all slightly better than expected. China's National Bureau of Statistics says China's economy showed signs of stabilizing in September and should see a slight pickup in growth in the fourth quarter.

The long and short of it: There were no bearish surprises in the GDP data, while the other economic data was better than expected, which is spurring some relief buying in commodities.

* China buying soybeans? Soybean futures posted double-digit gains and finished high-range Wednesday, which is being followed up with additional price strength this morning. As a result, there's speculation China has purchased or is looking to purchase soybeans. While that wouldn't be surprising given the $3-plus drop in soybean futures the past six weeks and the fact state-owned soybean prices in China are basically the same as imported soybeans, no purchases have been confirmed as of yet.

The long and short of it: A strong round of Chinese purchases is likely what's needed for the soybean market to put in a short-term low. Until then, any gains are merely a correction to the recent, sharp downtrend.

* Euro-zone headwinds easing. Concerns with the euro-zone debt crisis are easing, for now as Spain had positive results from its overnight bond auction and the country is expected to ask for bailout funding soon. Euro-zone leaders are meeting over the next two days to discuss the bloc's economic struggles, with this confab focused on major differences over plans for a banking union.

The long and short of it: There are some hopes the worst may be in the past until the next major hurdle surfaces. And more euro-zone problems will arise, but the easing of headwinds out of the region for now is allowing investors to modestly grow their risk appetite.



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