China’s service sector grew in September, with the Services Purchasing Managers’ Index (PMI) increasing to 52.9. This is higher than the expected 52.3, indicating ongoing growth in the service industry.

Investment Risks

Financial reports often include forward-looking statements that come with risks. These can include errors or delays in information that might affect financial decisions. When making investment choices based on this data, it’s important to keep in mind the possibility of losses. While the data shows growth, each decision should be carefully evaluated with an understanding of the associated risks. FXStreet advises that the information provided may not always be accurate. Readers should independently verify data before making any financial commitments. The services PMI data from China today is a positive sign of growth that surpassed market expectations. This suggests that domestic demand in China may finally be strengthening. We can view this as evidence that earlier government support measures are leading to real economic activity.

Market Implications

We should look for strength in currencies tied to commodities, especially the Australian dollar. The AUD/USD has historically reacted well to economic surprises from China. After a period of unstable trading throughout 2024, this news could spark a move higher. Traders might consider buying short-term call options to take advantage of potential gains in the AUD. This report also supports industrial commodities like copper. Since China accounts for over half of global copper demand, the increase in service sector activity can reduce concerns about an economic slowdown. We believe this will help copper prices remain above $9,500 per tonne, a level that acted as resistance earlier this year. For stocks, this could revive interest in Chinese shares that have been largely ignored. The Hang Seng index has struggled to find its direction for much of 2024, but today’s data could motivate traders to sell put options on major Chinese ETFs. This strategy reflects a belief that the downside risk is now smaller. Create your live VT Markets account and start trading now.

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