Soft Chinese Data Weighs on Asian Shares

Soft Chinese Data Weighs on Asian Shares

14 Mar 2019

Equity markets are mixed on Thursday. European shares are mostly higher following a mixed session in Asian which saw the Shanghai tumble following worse than expected Chinese data. The Brexit drama has been extended into a third vote to determine if there will be an extension of the withdrawal to the end of the month. This comes on the heels of two consecutive defeats. The dollar is mixed as sterling continues to whipsaw, and profit taking weighed on gold prices.

Chinese Data Was Softer than Expected

The soft tone of the Chinese economy has generated the need for stimulus from the Chinese government. The Lunar New Year has likely altered the recent data but that is still unknown. Retail sales rose in February to the slowest pace since 2012 rising by 8.2%, compared to expectations that it would increase by 9%. Industrial production decelerated to 5.3% from 6% in January. Expectations had been for a 5.6% gain. Unemployment increased to a 2-year high of 5.3% from 4.9% in January. Fixed asset investment bucked the trend rising more than expected increasing to 6.1% from 5.9%.

In the US that data was mixed as soft inflation figures were offset by better than anticipated US Durable Goods orders. Orders of items that last more than 3-years increased in February led by aircraft. According to the Commerce Department US Durable Goods orders increased in January by 0.4%. Capital goods ex-aircraft which is a proxy for business investment rose 0.8% which was the largest increase in more than 9-months.

Inflation Was Stable

Following a softer than anticipated consumer price index, wholesale prices were stable. According to the Bureau of Labor Statistics. US PPI increased by 0.1% in February which follows a similar decline in January. Core PPI which excludes food and energy increased by 0.1% in February. PPI increased 1.9% year over year in February and the core was up 2.5%.

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