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Chinese industrial output slows, retail sales strong

Chinese industrial output came in lower than market expectations on Monday, while retail sales beat economists’ forecasts. Asian markets started the week lower after US stocks finished last week mostly down, despite a boost from artificial intelligence-related stocks. All eyes will remain on central banks this week with monetary policy decisions due from Australia, Switzerland and the UK.

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

Industrial output in China increased 5.6% in May when compared with the same month a year earlier. That’s slower than April’s 6.7% increase and less than economists had forecast. Exports helped to keep industrial output from falling faster, with steel and aluminium production particularly high. On a positive note, retail sales in the world’s second-largest economy were up 3.7% on the year in May. On Monday, the People’s Bank of China also kept its key one-year interest rate, the so-called medium-term lending facility, unchanged at 2.5%. The Chinese government has implemented a series of measures over the last year aimed at propping up consumer and the crisis-ridded real estate market. Meanwhile, the West has ramped up tariffs on some industries, particularly the electric vehicle industry, as well as measures controlling Chinese companies’ access to chips designed for artificial intelligence. Hong Kong's Hang Seng Index was trading 0.5% lower on Monday, while the CSI 300 was down 0.2%.

Elsewhere in the Asia-Pacific region, sentiment on stock markets was weak. In Tokyo, the Nikkei 225 dropped almost 2%, with energy and real estate stocks dragging the index down. South Korea’s Kospi was trading 0.6% lower and Australia’s S&P/ASX 200 lost 0.3%.

All eyes on central banks

This week, central bank decisions will remain in focus with interest rate decisions due from the Reserve Bank of Australia on Tuesday as well as from the Swiss National Bank (SNB) and Bank of England (BOE) on Thursday. Barring a wild UK Consumer Price Index on Wednesday, the BOE is widely expected to keep rates at a 16-year high on Thursday. The SNB, however, is known to be much more difficult to read, having surprised markets with an interest rate cut in March. Looking beyond central banks, US retail sales are due on Tuesday, UK retail sales come out on Friday and a series of Services and Composite Purchasing Managers’ Indices are expected on Friday, including from Germany, the euro area, UK and US.

US consumer sentiment cools

The University of Michigan consumer sentiment index fell to 65.6 points in June from 69.1 in May, the preliminary estimate released Friday showed. Economists had expected the gauge of consumer sentiment to increase, but the survey’s assessment of personal finance dropped due to concerns about high prices and falling income. Consumers still expect inflation to be around 3.3% in the coming year.

In New York, tech stocks continued to climb on Friday, while the broader stock indices fell. The Dow Jones Industrial ended Friday’s session down 0.2% and the S&P 500 fell marginally. The Nasdaq-100 gained 0.4% on Friday to close at 19,659.81 points, yet another all-time high. The teach-heavy index was lifted by Adobe, whose shares shot up almost 15% on Friday, after the software company increased its revenue forecast due to its AI-based editing tools.

Corporate and macroeconomic calendars

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: SECO Swiss economic forecasts, Italian Consumer Price Index, Bundesbank monthly report, Empire State Manufacturing Survey.

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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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