China Hits 25 Year Low – Stocks Hold Ground

Despite the fact that Chinese GDP data released today revealed that the nation is at a 25 year low in terms of GDP growth, stocks held their ground across the region and finished in the green.

Contradictory to recent market moves in accordance with weak data releases, the SHCOMP finished up 3.13% despite the worst GDP data in 25 years. The Nikkei finished up 0.55% and the HSI was up over 1% in afternoon trade.

So what’s going on? Why haven’t the markets reacted as they have recently, even more violently this time?

It’s largely a case of the storm being over and current prices and market levels already reflecting the slowdown. Fear moves markets downward more than any other factor, and the fear has already been accounted for. What we are seeing now is a ‘new normal’ where investors expect the data to be weak, and so do not react extremely.

This is backed up by the fact that 25-year lows in China were largely in line with what analysts had expected, and didn’t come as an unexpected surprise.

Is the sell-off which rocked the first weeks of 2016 over? It looks like it….for now.

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Daniel Simmons