Overnight, Chinese economic data revealed worse than expected GDP growth (y/y) for 2015 with the figure coming in at 6.90% versus 7.30% a year earlier. It was the slowest growth rate for 25 years but the Shanghai Composite Index ended up rallying over 3% on the day. Investors shrugged off the disappointing GDP figures and instead focused on the People Bank of China’s decision to inject $91 billion of funds into the market in order to meet medium-term liquidity demand. The central bank also said it would cut its three month interest rate to 2.75%.
The Chinese equity momentum carried over to the US market initially but the Dow was unable to maintain gains and sold off as the session wore on. Gold didn’t have much of a reaction to the volatile equity market or crude oil losing another 3% today. The market is range bound with sellers happily emerging as gold reaches into the mid-$1,090s and buyers lifting it back up as it approaches down to its 50 day moving average.