China’s year-on-year industrial production rose by 4.1% in April. This was below the expected 5.9%.
The data points to slower output growth than forecast for the month. It compares the level of industrial production with the same month a year earlier.
With China’s April 2026 industrial output at 4.1% missing the 5.9% forecast, we see a clear signal of weakening global demand. This suggests a bearish outlook for industrial commodities that fuel Chinese manufacturing. We believe traders should consider buying put options on copper and iron ore ETFs, or directly shorting futures contracts.
This view is already being reflected in the market, with copper prices on the CME falling below $4.50 per pound in early May 2026 for the first time this quarter. Data from last week shows a build in warehouse inventories, confirming that consumption is lagging. This pattern reminds us of the slump we saw in mid-2025 when similar weak data led to a prolonged commodity downturn.
The slowdown will likely pressure the currencies of commodity-exporting countries. We expect the Australian dollar to underperform, making put options on the AUD/USD a timely strategy. The recent central bank minutes showed the Reserve Bank of Australia is now less hawkish, giving the currency little support against a strengthening US dollar.
We should also anticipate weakness in global equities with high exposure to the Chinese market, particularly in the heavy machinery and luxury goods sectors. Companies that rely on strong Chinese growth are now facing significant headwinds. Buying puts on an index of global mining companies could serve as an effective hedge against this slowdown.
This unexpected data miss increases overall market uncertainty, which typically leads to higher volatility. The VIX index, a key measure of market fear, has already ticked up to 15.2 from its yearly low of 12.8 last month. We see value in buying VIX call options as a cheap way to protect portfolios against a broader market correction in the coming weeks.
