Macro 4 minutes to read

Macro Brief: It’s all about China

Christopher Dembik

Head of Macro Analysis

Summary:  An increasingly cautious stance by the world's leading central banks, as well as optimism about China's ability to power a rebound, explain the relatively buoyant current state of global financial markets.


There are basically mostly two factors that explain the good performance of financial markets, despite rising risks: dovish central banks that are starting to try to offset ongoing growth slowdown and investors’ expectations regarding the global positive impact of China’s stimulus. Despite very ugly European PMI (especially for Germany), and increasing risk of a hard Brexit, investors remain very optimistic about growth developments. The two main downsides that can be noticed are low volumes and the fact that the positive market trend is mostly driven by the market entering the late stage of the cycle. 

We still think the market is a bit too complacent, especially regarding Brexit and the real impact of China’s stimulus. It will certainly take several months before China is back on its feet. In the interim, we should expect mixed data, as it was the case over the past weeks with IP and retail sales. It will take even longer for Europe to recover.

Today’s focus will be on US durable goods orders. The economic calendar is actually very light with few releases. US durable goods orders are expected to move lower in February, at minus 1.2%. Core capex orders and shipments are due to move south because of low global trade and impact of Chinese New Year. However, as it is a preliminary February report, it is unlikely that investors will pay too much attention to it. We have seen that market participants don’t really worry about weak Q1 data.

Today’s Calendar (All Times GMT)

07:00 Eurozone, Praet’s speech
09:00 Eurozone, PPI
12:30 USA, Durable goods exports
13 :45 USD, ISM New York
Disclaimer

Saxo Capital Markets (Australia) Pty Ltd prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Combined Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Pty Ltd.
Level 25, 2 Park Street
NSW 2000
Sydney
Australia

Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Combined Financial Services Guide & Product Disclosure Statement to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as CFDs and Margin FX products may result in your losses surpassing your initial deposits. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.
Please click here to view our full disclaimer.