Dec 14, 2018, by Lorcan Roche Kelly
Eco worries part I
Growth in the world’s second-biggest economy slowed again in November, with retail sales posting the worst performance since May 2003 and industrial production decelerating to 5.4 percent, below all estimates in a Bloomberg survey. The data is symptomatic of the wider problems facing China, where the trade dispute with the U.S. is just one of a number of factors wiping $2 trillion in value from the country’s stock market this year. Little wonder then that the Asian nation seems to be stepping up efforts to find a lasting agreement with its largest partner in commerce.
Eco worries part II
While Chinese data proved disappointing, this morning’s euro-area PMIs left little room for any schadenfreude. IHS Markit’s composite Purchasing Managers’ Index for the region dropped to 51.3, the lowest level in more than four years, largely driven by a disappointing reading from France that indicated a contraction amid the “Yellow Vest” protests. PMI readings for Germany also came in below estimates, seemingly confirming growth risks flagged by European Central Bank President Mario Draghi yesterday.
President Donald Trump can add the activities of his inauguration committee to the list of legal and political headaches threatening to bring further turmoil to the White House. Needless to say, Trump remained defiant in the face of the latest allegations. Meanwhile, the race to become the next Chief of Staff is down to five candidates, with former New Jersey Governor Chris Christie among those interviewed for the position. White House sources denied reports that Jared Kushner was in the running. Across the Atlantic, British Prime Minister Theresa May continues to face battles as European leaders gave her very little to help sell the Brexit deal at home.
Overnight, the MSCI Asia Pacific Index dropped 1.4 percent while Japan’s Topix index closed 1.5 percent lower as concerns over China’s growth weighed on the region’s stocks. In Europe, the Stoxx 600 Index was 1 percent lower at 5:50 a.m. Eastern Time as weak car sales added to wider concerns over the economic outlook. S&P 500 futures pointed to a lower open, the 10-year Treasury yield was at 2.877 percent and gold slipped.
Headline retail sales are expected to show growth of just 0.1 percent in November when the data is published at 8:30 a.m. Industrial production numbers at 9:15 a.m. may show an increase to 0.3 percent from October’s 0.1 percent, and PMI data is expected to soften slightly while still remaining in expansion territory at 9:45 a.m. At 1:00 p.m., the latest Baker Hughes rig count is published as investors remain somewhat at sea about how to model shale production.