17 January 2013: Cautiousness before Chinese GDP-data

Asian shares consolidated posted modest gains after better than expected US company earnings. Investors’ sentiment was, however, cautious ahead on Chinese GDP (Gross Domestic Product) data to-morrow. Dollar and Euro regained against yen after two days of profit taking on the sharp fall of the Japanese currency since November. USD/JPY trades a 88,24. The benchmark Nikkei index inched up after tumbling 2,6 % on Wednesday. World stock markets were flat.

The serious earnings season in US were off to a good start yesterday led by major banks as JP Morgan/Chase, Goldman Sachs and Bank of America. Goldman Sachs nearly tripled and JP Morgan fourth-quarter net income jumped 53%. Earnings for 2012 set a new record illustrating that banks, “too, big to fail”, with strong support and injections of government funds, have recovered from the 2008 break down in the financial markets. The rest of the economy is, however, still lagging behind, fighting to get out of recession.

Investors’ eyes at the end of the week are on China’s release of fourth-quarter GDP, December industrial output, retail sales and house prices. The data will offer clues to the health of the world’s second biggest economy. Individual numbers have given rise to cautious optimism that the downtrend in Chinese economy has come to a halt. Certain Western circles have seeded doubts on these numbers, stressing that China is manipulating statistics and not to be trusted.

Australia, very much dependent of the Chinese market, presented surprisingly bad employment figures yesterday. Unemployment rose with 5 500 in December bolstering odds for another interest rate cut. This prospect boosted shares and sent the Australian dollar down before the presentation of Chinese data. In In recession-stricken Europe car sales fell to a 17-year low in 2012. The challenges facing the global economy were outlined in the World Bank’s outlook for 2013. Citing slow recovery in developed nations the bank sharply cut its growth forecast to 2,4% economic growth down from 3 percent.

In an independent analysis, one of the world’s leading bank, HSBC, predicts that reduced concerns over the euro zone debt problems, last year’s more solid economic fundamentals and Chinese recovery will present buying opportunities in cyclical shares and boost commodities. The recent 3 months rally in platinum regaining its premium over gold is seen as an indication that investors start to be more proactive and take risks. There were small changes in the commodities yesterday. Brent crude dips below USD 110 a barrel, while NYMEX is up on lower than expected US oil storages. Precious metals hang on to earlier gains.

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