China's GDP data and the 5300 barrier make for an interesting market day

China’s economic data will be the key macro focus for markets today. Traditionally the data has not deviated far from expectations. However, there is potential for relief if China’s GDP is at least in line with expectations for 6.8% year on year growth. A GDP result in line with expectations would frank the recent stock market rally that has been partly driven by a view that markets have become too pessimistic about China’s economic outlook.

However, given the small deviation from expectations, which has been traditional for China’s GDP figure, any small downside miss has potential to worry markets, especially if monthly industrial production or retail sales data are also below expectations.

Friday’s high in the ASX 200 index stopped neatly at recent resistance around 5300. This is developing as a psychological level for the market. A clear break above 5300 based on ongoing relief about China’s economy would be a bullish signal. It would indicate to potential buyers that markets are setting up for the traditional yearend rally driven by reasonable growth from China in combination with potential for another delay in the Fed rate hike.