There was no significant reaction from the raft of Chinese GDP data with the Shenzhen index again unable to make any sustained headway through the long-standing resistance zone.
There was a generally favourable reaction to the US CPI data with the S&P 500 index advancing 0.62% on the day, while energy prices also moved higher following the latest API inventories data, which helped underpin equities.
The latest Chinese GDP data was in line with expectations at 6.7% for the third quarter, unchanged from the previous reading, while the investment and retail sales data was also in line with forecasts. The industrial production data was slightly weaker than expected at 6.1% from 6.3%.
Net sales of foreign exchange by the People’s Bank of China (PBOC) rose to an eight-month high in September and signalling increased capital outflows and underlying yuan pressure. China’s August holdings of US Treasuries also fell to the lowest level since November 2012, also indicating underlying pressure on the currency. The yuan was marginally weaker on Wednesday with a softer dollar lessening underlying pressures on the currency.
In contrast, the latest data on new loans was stronger than expected with an increase of CNY1.22trn for September from CNY0.95trn the previous month, while total social financing increased to CNY1.72trn from CNY1.47trn previously. The data increased overall confidence in the short-term growth outlook, although the strong increase in property loans increased concerns surrounding underlying stability risks.
The Shenzhen index moved higher at the open, briefly moving to above the 2,060 level, but prices drifted lower into the session break. Narrow ranges dominated after the break with a very slight downward bias.
The index closed 2.80 points and 0.14% lower at 2,053.79 again hitting resistance around September highs with a small increase in volumes on the day. The ChiNext index edged lower by 0.27% on the day as the index was again unable to overcome the September resistance area.
The US data is unlikely to have a major impact with markets continuing to monitor yuan trends closely in the short term, although consolidation may dominate now that the latest batch of data has been released.
Shenzhen Composite Daily Chart