Economic growth concerns brew

The watch continues for both US-China relations and Brexit, items driving markets, though the return of some concerns over economic momentum can be seen returning to weigh on the greenback.

Source: Bloomberg

US retail sales disappointment

Despite seeing the US earnings season kickstarting on a good note, the September retail sales watched for its indication of consumption health had been a disappointment. Coming in at a surprise decline of -3.0% month-on-month against the 0.3% consensus, this had been the first sub-zero reading and the lowest seen since February 2019. While there had been a building up of concerns from the soft indicators thus far, the extension of the impact into retail sales performance had certainly invited an increase of the scrutiny. The control group reading, which feeds directly into GDP accounting, had likewise disappointed, staying unchanged against the 0.3% expectation, building the downside risks for GDP and one that could invite the paring back of growth expectations for the US economy.

As it is, the market can be seen lifting its rate cut expectations and likewise battering the greenback. US dollar index, measured against six major currencies, was seen slipping to a near-2 month low, into Thursday. This is as the CME FedWatch tool reflected a lift in October’s rate cut view to 89% from 74% a day earlier. Do note that prices here can be seen edging towards the longer-term uptrend support, threatening a break. While the bearish bias is evident, the greenback had traditionally been one to stay resilient amid slowing global growth, thus expected to still stay largely supported going forward. Comparatively, it may be one to watch the likes of China’s data barrage into the end of the week to scrutinize the differentials in growth performance here.

Source: IG Charts

Caution warranted for Asia markets

Amid the mixed picture painted from both US earnings and economic data, and the noise swivelling within markets from both US-China relations and Brexit, Asia markets look to chart its own course into the session. Notably, there is a sense that Asia markets had largely been exhibiting a certain sense of resilience despite the latest threat of retaliation from China on the US’ interest to pass the pro-democracy bill on Hong Kong. It seems that the positivity from US earnings at the start of the week and hopes of an US-China mini deal had continued to carry the market, though just as with hopes for a Brexit deal, the sense of cautiousness continued to be warranted here.

Separately, Singapore’s September non-oil domestic exports arrived missing expectations, turning up at -8.1% year-on-year against the -7.0% consensus. The key electronic exports had likewise declined though by a smaller extent of 24.8% compared to the 25.9% in August. This marks the seventh consecutive month in which exports had been in red, continuing to paint the gloomy picture for the export sector. With the global climate on hand, this trend is looking unlikely for a turnaround in the near term. Certainly, for markets, this had perhaps come with little surprise, the local STI declining a slight 0.2% in the early hours and USD/SGD little moved.

Yesterday: S&P 500 -0.20%; DJIA -0.08%; DAX +0.32%; FTSE +0.61%


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 30
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
-
-
-
-
China 300
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider.You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.