Chinese slowdown hits shares
By Vincent-Frédéric Mivelaz
Growth slowed in Chinese retail sales and industrial production in November: at 8.10% (prior: 8.60%) and 5.40% (prior: 5.90%). They were below economists’ estimates, and they fell despite support from policy measures. Hong Kong’s Hang Seng (-1.62%) and CSI 300 (-1.67%) dropped, and Japan’s Nikkei 225 was also hit (-2.02%). Meanwhile, crude oil dropped intraday due to OPEC negative oil demand outlook, seen at 31.44 million barrels per day, 100’000 bpd lower than last month’s estimates. The dollar index is gaining strength (+0.77%) as the Federal Reserve Bank’s meeting next Wednesday approaches, with expectations of a 0.25% rate hike. USD/CNY is currently trading at 6.9005-6.9015; the central bank fixing is at 6.8750.
Japan’s growth slows
By Vincent-Frédéric Mivelaz
Japan’s Q3 GDP fell 2.50%, its hardest contraction since June 2014. A sharp drop in October’s current account balance supported the gloomy picture. The Bank of Japan’s Q4 Tankan data confirms that business is heading downward.
Manufacturers’ sentiment was unchanged, following three quarters of declines. Industrials remain largely more upbeat, as the impact of major typhoon Trami and earthquake from September requires the reconstruction of infrastructure in the region. Overall however, trade tensions between the US and China remain, and bilateral discussions with Washington will start as early as January 2019. The Japanese government will aim to safeguard tariffs related to US beef. USD/JPY is currently trading at 113.50, approaching the 113.70 range short-term.