Commodities just can’t catch a break – and China’s upcoming gross domestic product (GDP) release on January 20 could throw another punch at the beleaguered asset class should it underperform expectations, warn analysts.
“We are days from the release of China’s Q4 GDP and copper is the best barometer of growth. The rout gives me reason to believe China’s growth is not only moderating but is slowing faster than estimated,” Evan Lucas, market strategist at IG wrote in a note.
“If China disappoints next Tuesday, brace for a real rout in commodities,” he said.
Copper, regarded as an important indicator of economic health, joined the selloff in commodities Wednesday after the World Bank downgraded its growth outlook for the global economy.
The global economy is forecast to expand by 3 percent this year,the Washington-based lender said in its Global Economic Prospects report released on Tuesday, a notch lower than its previous forecast of 3.4 percent made in June, but up from an estimated 2.6 percent in 2014.