Daily Stocks Update: Equities Shrugging Off Weak Chinese Data?

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Data from China came in weaker than expected over the weekend, reviving fears of a slowdown in the world’s second largest economy and therefore the global economy. Industrial production slowed from March’s 6.8% year-over-year gain to just 6.0% while retail sales sank from 10.5% to 10.1% instead of improving to the projected 10.6% figure. Fixed asset investment also fell short of expectations, dropping from 10.7% to 10.5% instead of advancing to 11.0%.

Even so, Asian equities managed to chalk up gains, possibly driven by expectations of additional easing. The China A50 index closed 22.04 points up to 9,370.86 (+0.24%), the Nikkei rose 54.19 points to 16,466.40 (+0.33%), and the S&P ASX 200 index climbed 29.96 points to 5,358.95 (+0.56%).

The strong surge in oil prices has been partly responsible for the pickup in stock performance, as higher forecasts from Goldman Sachs buoyed sentiment in the commodity markets. WTI crude oil is up to $47.05/barrel while Brent crude oil rose to $48.65/barrel.

US markets poised for stronger open

Futures are suggesting a strong open for US markets today, buoyed partly by stronger than expected data released last Friday. Headline retail sales picked up 1.3% in April instead of sliding by 0.3% while core retail sales advanced 0.8% versus the projected 0.6% increase. Meanwhile, the preliminary UoM consumer sentiment index rose from 89.0 to 95.8 to indicate better optimism and possibly stronger spending down the line.

Dow 30 index futures are up 10.0 points to 17,504.0 (+0.05%), S&P 500 futures are up 1.88 points to 2,045.38 (+0.09%), and Nasdaq futures are up 2.25 points to 4,326.25 (+0.05%). US equity indices closed lower on Friday, as investors likely reduced their positions ahead of Chinese data releases for the weekend. In addition, earnings data from Nordstrom and other major retailers came in below expectations, undermining the strength of the consumer sector.

European banks are closed for the holiday today and only a few medium-tier reports are lined up for the US economy. The Empire State manufacturing index is up for release and a dip from 9.6 to 7.2 is eyed, possibly indicating a slowdown in expansion. US earnings reports could continue to affect market sentiment today, although the larger companies such as American Eagle, Cisco, Target, Urban Outfitters, and Walmart are set to release their numbers around the middle of the trading week.

 

 

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.