This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
Early Monday morning we will have Q2 GDP data reading from China. This got me thinking. What impact will this have on markets Monday morning? Are you holding shares over this period and leaving risk on? or does this give you a natural point in time to take risk off and reassess Monday morning?
So what if GDP is better than expected? The consensus is that we will see the lowest GDP reading since 2009 (Lower still than April 2019’s reading!) but what if, what if it beats expectation? Well a higher reading would mean the economy is growing quicker than expected. In theory would be good news for dual listed mining stocks. This could this mean less need for stimulus? If there is less stimulus in the markets, typically, investors may look elsewhere at a lower risk investment to attempt to achieve a return, so this could be detrimental.
Of course, we must consider the other side of this equation. GDP worse than expected. Would mean the economy is contracting, bad news for miners? Well not necessarily… This could mean we do in fact get additional stimulus in the markets and this could push investors towards the miners.
These theories are of course subjective. There are some facts that are important to consider, we will be discussing with clients as this week draws to a close. Making the difficult decision to cut a loss will never be easy, however, it does ensure one thing, the loss cannot widen. After all, if the shares you cut react positively on Monday morning, you can always renter the position. You may miss out on a percentage of the movement up, but equally you might miss the whole movement down!
If you believe we may see a rally on Monday morning, then why not position yourself accordingly this afternoon. After all what’s to say we couldn’t get a blow out number? A number that propels some of these stocks back towards recent highs? Anglo American are 8% below highs of less than a month ago, Rio 4.5% below, Glencore 6.5% below & the list goes on.
So will you be leaving risk on, or taking risk off the table this weekend?
Do you like to trade Banks, Miners, Retails or housebuilders? All have potential to deliver big share price moves next week. To stay in the loop about what could move them and to receive daily trade ideas, make sure you sign up to our Research Gold Pass.
Enjoy your weekend.
Chris Peters, Senior Trader, 12th July 2019
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