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China reflation seen as cost-driven with profit gains in AI and oil

Standard Chartered expects low inflation and low yields, supported by accommodative policies, to persist as rebalancing takes time.

Reported · Written up by our desk · Central Banks

Standard Chartered analysts Carol Liao and Moriarty Lam said China’s ongoing reflation remains largely cost-driven, rather than broad-based demand-led growth. They also noted industrial profit recovery is concentrated in AI- and oil-related areas.

The analysts highlighted an ongoing imbalance, saying domestic demand continues to lag supply. They argued that this mismatch is likely to keep rebalancing slower than investors would want.

Standard Chartered said it expects accommodative policies to remain in place and that China is likely to stay in a low-inflation, low-yield regime as the economy adjusts. The firm linked the outlook to the idea that the rebalancing process will take time rather than quickly normalize.

Separately, FXStreet described near-term FX market moves, including GBP/USD easing from multi-week peaks around 1.3530 back toward the 1.3500 area. It also said gold pushed past $4,350 per troy ounce even as a steadier US dollar pressured risk sentiment amid continued uncertainty around the reopening of the Strait of Hormuz and US-Iran talks.

Latest closeGold $4,292.00 ▲1.1%|GBP/USD 1.345 ▼0.1%

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