Asian markets in retreat as China growth slows further

Gold prices fall, silver follows suit

The result was in line with forecasts.

Financial markets are closely watching the health of the Chinese economy as the year-long Sino-US trade war takes a heavier toll on businesses and investment, fuelling worries of a global recession. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy.

The growth was slower than the 11.8-percent expansion recorded in the first quarter and the 11.2-percent increase in the first five months.

The reading highlights the negative impact the U.S. tariffs stand-off is having on China as leaders also try to recalibrate the growth model from exports and state investment to one driven by consumer spending.

High-level trade talks to resolve the issues resumed this month, but the gulf between the two sides remains wide.

Asian shares advanced on Monday as investors breathed a sigh of relief after encouraging Chinese data suggested the world's second-biggest economy may be starting to stabilize thanks to ramped-up stimulus from Beijing.

Bond yields have been moving higher for several days, suggesting investors are confident the USA economy will power ahead, at least for the next several months.

"The danger is that with a mountain of cash parked in money market funds any trade ceasefire would cause a huge shift away from safe assets", said Sean Darby, Jefferies' global equity strategist. It has also quietly guided short-term rates lower.

-China trade war had sparked questions over whether more forceful easing may be needed to get the Chinese economy back on steadier footing, including some form of interest rate cuts.

Retail sales, a gauge of consumption, rose 8.4 percent in H1, accelerating from 8.3 percent in the first quarter.

Sales of big-ticket items such as cars have not held up, though, with sales down 12.4% in the first half of the year, according to the China Association of Automobile Manufacturers.

Some analysts, however, questioned the apparent recovery in both output and sales. Motor vehicle production actually fell 15.2%, the 11th monthly decline in a row, suggesting automakers don't expect a sustained bounce in demand any time soon.

"Looking ahead, we doubt that the data for June will mark the start of a turnaround".

Despite cooling sales and prices, real estate investment, a major growth driver for the world's second-largest economy, quickened in June.

Fixed-asset investment climbed 5.8 percent during the period, up from 5.6 percent for January-May.

"While GDP touched a 27-year low in Q2, the on-consensus print does lessen market fears that China's economy is headed for a hard landing", said Stephen Innes at Vanguard Markets.

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