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- China posted its weakest quarterly economic growth since the global financial crisis on Monday, raising pressure on policymakers to cut interest rates further and roll out other support measures to avert a sharper slowdown. Chinese leaders have been trying to reassure jittery global markets for months that the economy is under control after a shock devaluation of the yuan and a summer stock market plunge fanned fears of a hard landing. The world’s second-largest economy grew 6.9 percent in the July-September quarter from a year ago, slightly better than analysts’ estimate of 6.8 percent, but down from 7 percent in the second quarter. That is the weakest reading since the first quarter of 2009, when growth tumbled to 6.2 percent. However, analysts still mostly believe China’s slowdown will be gradual rather than more calamitous. Other September figures also released on Monday pointed to stubborn weakness in the Chinese economy. Factory output rose 5.7 percent in September from a year ago, missing forecasts for a 6 percent rise, and fixed-asset investment (FAI), a key driver of the economy, climbed 10.3 percent in the first nine months of the year, below estimates of 10.8 percent. Retail spending alone bucked the trend, growing at an annual rate of 10.9 percent, slightly better than forecasts for 10.8 percent growth.
- The dollar was steady against the yen and euro early on Friday after stronger-than-expected U.S. data kept alive prospects of the Federal Reserve raising interest rates before year-end. The dollar got a boost at the end of last week from an upward revision in industrial production for August and a University of Michigan survey showing a sharp rebound in consumer sentiment, which pushed U.S. debt yields higher. The divergence of monetary policies between the United States and those in Japan and the euro zone also underpinned the dollar. Japan’s government lowered its assessment of the economy and industrial production last week as output sagged.
- Crude oil fell in Asia on Monday as investors noted mixed economic data out of China that showed slightly better GDP growth figures than expected. The data is closely watched amid fears that a China-led slowdown in global growth could prompt the Fed to delay hiking rates for longer. Last week, industry research group Baker Hughes said late Friday that the number of rigs drilling for oil in the U.S. decreased by 10 last week to 595, the seventh straight weekly decline. Over the prior six weeks, drillers had cut 70 rigs. A lower U.S. rig count is usually a bullish sign for oil as it signals potentially lower production in the future. Saudi Arabia and other Gulf OPEC members have indicated they will continue to stick to their policy of defending market share by keeping production high. A meeting of OPEC technical experts in Vienna on October 21 may shed further light on the group’s position of maintaining production at current levels as prices remain muted.
- Bank of Japan Governor Haruhiko Kuroda on Monday said the central bank will make necessary adjustments to its aggressive easing while monitoring risks to growth and inflation. The BoJ will continue to monitor both upside and downside risks to growth and inflation, and make adjustments as appropriate,” he said. The BoJ will release its quarterly report on economic conditions in Japan’s nine regions at 1400 JST (0500 GMT). In July, one region upgraded its economic assessment from three months earlier while the remaining eight regions maintained their views, with all saying the economy was recovering.