Uncertainty regarding U.S.-China trade war and Chinese domestic economic development remains high - Nordea Markets

Nordea Markets' analysts note that China's GDP growth slowed to 6.2% in Q2 2019 amongst high uncertainty around the trade war.

• “The uncertainty around the trade war and thus also regarding Chinese domestic economic development remains high. Although presidents Trump and Xi agreed to restart the trade negotiations at their bilateral meeting at the end of June, it seems that all key questions are still without a solution. Thus, we do not expect a deal to materialize any time soon and believe the uncertainty surrounding the trade war will persist into the second half of 2019. Regarding the domestic economy, official numbers continue to show robust growth. While growth is supported by domestic consumption, negative impacts of the trade war will weigh on the growth outlook going forward.”
• China’s GDP growth slowed to 6.2% in Q2 2019. In quarterly terms, GDP increased by 1.6%, which was in line with our forecast. The monthly indicators show that consumption-driven growth has remained robust, but outlook uncertainty persists.
• The main risk factor for the outlook is still the trade war between China and the US.
• USD/CNY is receiving some support from the dovish Fed, but lingering trade worries and limited impact from stimulus measures keep strengthening in check.”