LGT Navigator

Chinese factory output accelerates, but consumer remains weak

Editorial note: Due to a holiday, the next edition of the LGT Navigator will be published on Tuesday, 21 May 2024.

Economic data released out of China on Friday painted a picture of a lopsided economy. Chinese factory output beat expectations while retail sales slowed. That pressured stock markets in Asia on Friday after US and European equities had mostly closed in the red on Thursday. Market participants will keep an eye on the Harmonised Indices of Consumer Prices due out of Europe on Friday after inflation data from the US came in tame earlier this week. 

Shane Strowmatt, LGT
Temps de lecture
5 minutes
China port
© Shutterstock

Industrial production in China expanded 6.7% in April when compared with the same period a year earlier. That is much higher than March’s 4.5% figure and above market expectations. Retail sales increased by 2.3% on the year in April, down from 3.1% in March and was far below market expectations. It was also the slowest growth rate for retail sales since the end of 2022. Late in the Asian trading session, Chinese stocks were bucking the trend with mild gains. Hong Kong's Hang Seng Index was trading 0.4% higher, while the Shanghai Composite was up 0.1%. In Tokyo, the Nikkei 225 lost 0.5% and South Korea’s Kospi dropped 0.9%. Australia’s S&P/ASX 200 was trading 0.8% lower on Friday.

A series of macroeconomic data out of the US on Thursday kept traders guessing about the state of the US economy and the Federal Reserve’s (Fed) next monetary policy move. Import prices came in hotter in April than market expectations at a 0.9% increase on the month. Meanwhile, first-time applications for unemployment benefits in the US decreased by 10,000 to 222,000 last week. New home constructions increased by less than expected in April and new housing permits fell by 3% to their lowest value since late 2022, demonstrating the pressure on real estate markets due to higher interest rates for home loans. Industrial production was flat during the month, showing the manufacturing sector is also struggling to gain momentum.

Thursday’s economic data releases failed to provide a clear direction for markets. In New York, stock indices were initially trading in positive territory following a drive to new all-time highs during the previous session, but then stalled later on Thursday. The Dow Jones Industrial briefly broke the 40,000 mark for the first time on Thursday but retreated from the intraday all-time high to close Thursday’s session down 0.1% at 39,869.38 points. The S&P 500 and tech-heavy Nasdaq-100 both lost 0.2%.

In Europe, stock indices closed mostly lower on Thursday. The Euro Stoxx 50 fell 0.5%. Switzerland’s SMI was the only bright spot among major markets on the continent, increasing 0.4% on Thursday. In individual stocks, Siemens shares fell almost 7% after the German industrials company lowered its sales guidance for its Digital Industries segment. Swiss insurance companies Swiss Re and Zurich Insurance gained 3.8% and 3.5%, respectively, after both firms reported first-quarter results that beat market expectations.

Corporate news in focus: Quarterly figures from Richemont.

Economic data in focus: Swiss industrial production, eurozone Harmonised Index of Consumer Prices.


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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.

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