China Retail Sales Soar 9% in August; Trump Says U.S. Under No Pressure to Make Trade Deal

In China, Fixed Asset Investment came in at 5.3%, slightly below the 5.5% forecast. Industrial Production rose 6.1%, slightly above the 6.0% estimate. Retail Sales came in 9.0% higher, versus an 8.8% forecast. The Unemployment Rate dipped from 5.1% to 5.0%.
James Hyerczyk
U.S. Trade Deal
U.S. Trade Deal

After Thursday’s U.S Consumer Inflation report, all eyes shifted to early Friday’s economic reports from China. And from what I can see, there were no major surprises with most reports coming out slightly better than expectations.

In China, Fixed Asset Investment came in at 5.3%, slightly below the 5.5% forecast. Industrial Production rose 6.1%, slightly above the 6.0% estimate. Retail Sales came in 9.0% higher, versus an 8.8% forecast. The Unemployment Rate dipped from 5.1% to 5.0%.

Asia Stock Markets

Asia markets are trading mixed early Friday with the price action being controlled by lingering tensions over trade. Investors are following the late weakness on Thursday in the U.S. markets, which was fueled by a comments from President Donald Trump. He said that Washington was “under no pressure to make a deal with China, they are under pressure to make a deal with us.” He added that the U.S. “will soon be taking in Billions in Tariffs & making products at home.”

Earlier in the week, investors were a little more optimistic about ending the trade conflict after reports on Wednesday said the U.S. was seeking to restart trade negotiations with China.

At 0315 GMT, Japan’s NIKKEI 225 Index was trading 23042.83, up 221.51 or +0.97%. In Australia, the S&P/ASX 200 was at 6167.70, up 39.00 or +0.64% and in China, the Shanghai Index is trading 2681.75, down 4.72 or -0.18%.

Helping to underpin the indexes in Asia is semiconductor stocks, which are rebounding early Friday after general weakness all week.

U.S. Stock Indexes

The major U.S. stock indexes finished higher across the board on Thursday. Sentiment was helped by weaker than expected U.S. consumer inflation data. The data wasn’t weak enough to curtail this month’s Fed rate hike, but when combined with Thursday’s weak producer inflation report, it could be an early indication rising inflation may have been tempered. It also suggests that the Fed may be nearing neutrality.

Gold

Gold futures rallied early in the session on Thursday after the weak CPI data drove down Treasury yields, dragging down the U.S. Dollar and making dollar denominated gold a more attractive investment to foreigners.

Prices retreated late in the session, leading to a lower close after President Trump tempered expectations of a quick solution to the trade conflict.

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