Chinese consumers are spending more, and not just locally, according to Reuters
Looking ahead to the European and global markets from Stella Qiu
Asian stocks ended a brutal week on a positive note helped by Chinese buyers pushing retail sales above forecasts after a flurry of policy support measures for … well, the stock market, mostly.
Yes, property sales have picked up a tad but are still down a whopping 15.8% from last year. The downturn in property investment has deepened and house prices are at their lowest in nine years – likely investors looking for a replacement.
Chinese shares pared losses after the data burst although the green chips ended down 0.4% on pace. Still, that’s up 30% from September’s low thanks to Beijing’s stimulus.
Around the world, the growth base of the stock markets is becoming less and less as investors, who were happy with the victory of Donald Trump in the US presidential election, have growing concerns about the weakening of US policy in the new year – which is not surprising given the president-elect. strong trade and immigration policies.
Federal Reserve Chairman Jerome Powell’s comments about the lack of need to accelerate interest rate cuts sent short-term Treasury yields higher as the market reduced bets on a December rate cut to just 59% from 82% during the week.
The future of the Fed fund for the next year decreased in December from 8 ticks and that means only 71 points to reduce by the end of 2025, which is less than three standard size cuts.
That’s one reason Wall Street and European stock futures are in the red. Nasdaq futures were down 0.5%, EUROXX 50 futures 0.4% and 0.2%.
That shift in the Fed’s outlook reinforced expectations that the Bank of England won’t cut rates anytime soon, with the next move not fully due until March thanks to Chancellor Rachel Reeves’ big spending budget.
The central bank will be looking at GDP figures for the third quarter with forecasts focusing on an increase of 0.2% compared to 0.5% in the previous quarter.
Britain’s economy has done better than many had feared this year and any blow would throw off another bet for a 62-point cut by the end of next year.
The US will also have retail sales data later. And, with producer prices presenting a high risk to the Fed’s preferred inflation gauge – the Personal Expenditures Price Index – markets may not see a drop in retail sales as a positive.
Key developments likely to impact markets on Friday: * UK third quarter GDP * US retail sales * Boston Fed President Susan Collins speaks * ECB board member Elizabeth McCaul participates in panel discussion * Governor from Riksbank Erik Thedeen takes part in the seminar.
