Global shares fell, and the dollar weakened on Monday after the data release indicated slower-than-expected growth in the Chinese economy. However, U.S. stocks managed to rise on the anticipation that company earnings would surpass forecasts and the strong likelihood of continued consumer spending. <h2>China's GDP Growth and Mixed Monthly Data</h2> China surpassed expectations in the second quarter, experiencing a notable growth rate of 0.8%, surpassing the estimated 0.5%. This impressive performance reflects the nation's resilience and economic prowess. However, the annual pace of growth slowed more than expected to 6.3%, well below the expected 7.3%. Analysts view this data as an indication that China's post-COVID economic boom is coming to an end. In contrast, concerns in the United States about a severe economic downturn faded earlier this year as slower consumer inflation has brightened the outlook. This positive trend is reflected in the second-quarter results reported by companies. <h2>Optimistic Outlook for U.S. Earnings</h2> Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan, remarked that while companies face a slightly higher hurdle rate compared to the past few quarters, S&amp;P 500 companies have generally been able to surpass the low analyst estimates that were set prior to the current earnings season. Going forward, the market will closely monitor whether demand remains strong and whether the corporate outlook remains positive for the rest of the year. <h2>Anticipated Earnings Reports and Market Reactions</h2> This week, several prominent tech companies and banks are set to release their earnings reports. Major names reporting include Tesla, Bank of America, Morgan Stanley, Goldman Sachs, and Netflix. The stock market showed positive momentum on Wall Street, with the Dow Jones Industrial Average climbing by 0.18%. Similarly, the S&amp;P 500 experienced an increase of 0.20%, while the Nasdaq Composite outperformed with a significant rise of 0.47%. These upward trends indicate a promising outlook for investors and highlight the market's robust performance.<h2> </h2><h2>European Stocks Weaken</h2> In Europe, stocks experienced weakness, with the pan-European STOXX 600 index down by 0.60%. Meanwhile, MSCI's U.S.-centric gauge of stocks globally showed a slight decrease of 0.01%. <h2>Dollar Remains Steady as Investors Await Fed Meeting</h2> The dollar traded relatively flat against a basket of currencies after experiencing its largest weekly decline in 2023 last week due to decreased Treasury yields. Investors eagerly await the Federal Reserve's upcoming meeting, during which a 25 basis points rate hike is widely anticipated. <h2>U.S. Retail Sales Data and Monetary Policy</h2> The main U.S. economic data for the week will be the retail sales figures for June, set to be released on Tuesday. While this data is not expected to impact monetary policy or market direction significantly, it is anticipated to show a rise of 0.3% ex-autos, aligning with the market's favored soft-landing theme. The futures market is pricing in an additional 32 basis points of tightening this year, with the benchmark rate projected to peak at 5.40% in November. As a result, the market feels that the chances of further rate hikes after the conclusion of the two-day meeting of the Federal Reserve on July 26 are slim. <h2>Treasury Yields and Inflation Outlook</h2> U.S. Treasury yields experienced a sharp decline last week due to the moderation in consumer and producer price inflation during June. This decrease has raised expectations of a more dovish monetary policy. The two-year Treasury yield, which is closely associated with interest rate projections, experienced an increase of 1.5 basis points, reaching 4.766%. In a similar vein, the benchmark 10-year note also saw a rise of 1.4 basis points, reaching 3.834%. These movements in yields indicate a shift in interest rate expectations, potentially impacting various financial sectors. <img src="https://cdn.forexoverflow.io/images/1689614596220-ghv3jwe21gkv64r-chinas-faltering-growth-1.png">Image source from Reuters <h2>Sterling Weakens Ahead of UK Inflation Figures</h2> Sterling reversed its course, declining by 0.2% to $1.3089 in anticipation of the release of UK inflation figures this week. If the data indicates higher inflation, the risk of a substantial rate hike by the Bank of England has increased. Analysts at CBA noted that a lift in the core CPI could encourage financial markets to anticipate further tightening from the Bank of England, potentially pushing GBP/USD towards upside resistance at $1.3328. <h2>Oil Prices Drop Due to Weaker Chinese Economic Growth</h2> Oil prices fell more than 1% after the release of Chinese economic growth data failed to meet expectations. The price of US crude oil experienced a decline of 0.74%, settling at $74.86 per barrel. Similarly, Brent crude oil also faced a decrease of 0.81%, reaching $79.22. These downward shifts in crude oil prices suggest a potential adjustment in the energy market, impacting global economic dynamics and influencing various industries reliant on oil. In Summary, global shares experienced a dip due to disappointing Chinese economic data. At the same time, U.S. stocks managed to gain as investors expressed confidence in strong company earnings and continued consumer spending. The anticipation of key earnings reports and the upcoming Federal Reserve meeting have been key factors influencing market sentiment. Investors will closely watch future developments in China, US retail sales data, and central bank policies to gauge the momentum in global financial markets.

istockphoto-970600792-1024x1024-transformed.jpeg

Explore the impact of disappointing China data on global shares as they slip, highlighting the influence of economic indicators on the market.

China Data Disappoints: Global Shares Weaken

Global Shares Slip as China Data Disappoints; U.S. Stocks Rise

In recent news, European shares experienced a decline as Richemont, a luxury group, faced a slump in its organic sales growth. Additionally, lackluster economic growth in China raised concerns about the demand from the world's second-biggest economy. This article will delve into the key highlights and implications of these events. <h2>Key Highlights</h2> <ul><li>The STOXX 600 index is down by 0.3%.</li><li>Richemont experiences a decline in share price following disappointing organic sales growth.</li><li>Other luxury firms are negatively affected by weak data from China.</li><li>Argenx sees a significant increase in stock value due to positive results from a drug study.</li></ul> <h2>European Shares' Performance </h2> On July 17, according to Reuters, European shares encountered a downward trend due to the mentioned factors. The luxury sector, in particular, experienced considerable selling pressure, contributing to the decline in the pan-European STOXX 600 index. <h2>Impact of Richemont's Slump </h2> Richemont, as the second-largest luxury firm globally, faced a significant setback as its organic sales growth failed to meet expectations. The decline in the Americas market had a notable impact on the company's performance. This drop in sales indicates a potential reduction in consumer spending, possibly influenced by the Federal Reserve's tightening policies. Stuart Cole, the chief macroeconomist at Equiti Capital, highlighted the possibility of a curtailment in spending. <h2>Weakening Luxury Giants </h2> Luxury brands LVMH, Hermes, and Kering also experienced a decline in their share prices. This trend can be attributed to the lackluster economic growth in China, which has raised concerns about future demand in the luxury market. With both the U.S. and Chinese consumption showing signs of slowing, the market has responded by marking down stock prices. <h2>Sectoral Impact </h2> The personal and household goods index (.SXQP), housing luxury firms, encountered the most substantial sectoral decline, plummeting by 2.2%. Similarly, the mining sector (.SXPP) faced a decline of 1.4% due to concerns about the demand for metals from China, the largest consumer. <h2>Market Outlook </h2> The benchmark STOXX 600 index recently achieved its most significant weekly percentage gain since March. The market had hoped for a possible end to the rate hike cycle by the Federal Reserve after July, given the cooling U.S. inflation. However, analysts caution that other major central banks, particularly the Bank of England, still have room for further tightening. <h2>Upcoming Earnings </h2> Investors are closely monitoring earnings announcements, with companies like Tesla (TSLA.O) expected to release their results this week. The second-quarter results season began with significant U.S. banks, adding further importance to the upcoming reports. <h2>Positive News for Banco BPM </h2> Banco BPM (BAMI.MI) experienced a rise of 2.1% in its share price after entering a payments deal with private equity fund FSI. This development contributed to the sub-index of banks (.SX7P) gaining 0.5%. Healthcare shares (.SXDP) also aided in limiting the overall losses in the STOXX 600. <h2>Argenx's Promising Drug Study Results </h2> Argenx SE (ARGX.BR) emerged as the top performer in the benchmark index, recording an impressive surge of 26%. This remarkable increase can be attributed to positive outcomes from its drug study focusing on neurological disorders. In Summary, the decline in European shares, driven by Richemont's slump and weak economic growth in China, has raised concerns about the luxury market and overall market sentiment. The performance of key players in the upcoming earnings announcements will provide further insights into the market's direction. Additionally, positive developments in the banking and healthcare sectors have helped cushion the overall losses in the STOXX 600 index.

European Market (1).png

Explore the reasons behind the slip of European shares as Richemont and tepid China data contribute to the downward movement of stocks.

European Stock Market Drops on Richemont, China Data

European Shares Slip as Richemont, Tepid China Data Drag

<h2>A Positive Outlook for Asian Shares and Bonds</h2> Asian shares and bonds experienced a notable rally on Thursday, while the dollar sustained substantial losses. The market was influenced by a surprising downturn in U.S. inflation, leading to speculation that the post-pandemic tightening cycle may be nearing its end. <h2>Examining China Trade Data and Its Impact</h2> Investors are eagerly awaiting China's trade data to indicate the performance of the world's second-largest economy following several disappointing economic releases. Recent data released on Thursday morning showed that exports rose by 3.7% in yuan-denominated terms in the first half of the year, while imports remained relatively stable. Additional data is expected to be released later in the day. <h2>Positive Performance in Asia-Pacific Shares</h2> MSCI's broadest index of Asia-Pacific shares outside Japan, represented by (.MIAPJ0000PUS), surged by 1.5%, primarily driven by a 2.1% jump in Hong Kong's Hang Seng index (.HSI) and a 1.4% gain in Australia's resources-heavy shares (.AXJO). Japan's Nikkei (.N225) also experienced a solid advancement of 1.2%. <h2>Encouraging Rally for Chinese Tech Giants</h2> Chinese tech giants listed in Hong Kong (.HSTECH) demonstrated a strong rally of 3% during early trade. This surge was attributed to Premier Li Qiang's call for these companies to support the slowing economy. It serves as yet another sign that the extensive crackdown on the sector, which has lasted for several years, is now coming to a close. <h2>U.S. Consumer Inflation Report Presents Promising Results</h2> The highly anticipated U.S. consumer inflation report delivered better news than initially anticipated. In June, the Consumer Price Index (CPI) rose by 3% compared to the previous year, falling below expectations of a 3.1% increase. This figure starkly contrasts the 9.1% rise witnessed in the same month last year. Furthermore, core inflation, which has been a source of concern for the Federal Reserve (Fed), also displayed a more substantial-than-expected slowdown. <h2>Positive Response from Wall Street</h2> Wall Street responded positively to the report, with the Nasdaq (.IXIC) climbing by 1.2% and the S&amp;P 500 (.SPX) gaining 0.7%. Michael Feroli, the chief U.S. economist at JPMorgan, expressed optimism, stating, "With the usual caveat of one month not making a trend, the narrow path to a soft landing looks a smidgeon wider this morning." He added, "There may be a few doves on the FOMC who would be willing to see how far this process can run without additional tightening, but we expect that the Fed leadership is still strongly inclined to hike in two weeks... before the Committee goes on an extended pause." <h2>Market Expectations and Forecasts</h2> Despite the positive sentiments, futures currently imply a 94% probability of a quarter-point hike from the Fed later this month. However, the likelihood of another hike in September has decreased to 13.2% from 22.3% the previous day, according to the CME FedWatch Tool. Additionally, futures prices now indicate a projected 125 basis points in rate cuts for 2024. <h2>Relief for Bonds and a Weakening U.S. Dollar</h2> Following a significant sell-off that sent global yields soaring last week, bonds experienced a sigh of relief. The ten-year Treasury yield, which stood at 3.8534% in Asia, plummeted by 12 basis points overnight, a notable decline from the seven-month peak of 4.0940% reached on Friday. Similarly, rate-sensitive two-year yields remained relatively stable at 4.7272% in Asia after a substantial drop of 15 basis points overnight, leading to a steepening in the yield curve. Simultaneously, the U.S. dollar slumped to a fresh 15-month low against major currencies. This decline alleviated pressure on emerging market currencies and allowed Asian policymakers greater flexibility in implementing monetary policy. <h2>The Influence of the Euro and the Japanese Yen</h2> The euro surged to a fresh 15-month high of $1.1144 on Thursday, following an overnight increase of 1.1%. This rise was driven by expectations of a more hawkish stance from the European Central Bank, considering the anticipated conclusion of the Fed's hiking cycle.Additionally, the Japanese yen, which had been subject to extensive selling pressure due to Japan's ultra-easy monetary policy, gained 6 yen against the dollar over several sessions. It was last valued at 138.26 per dollar. Alan Ruskin, the chief international strategist at Deutsche Bank, commented on the situation, stating, "The Fed's leadership in the global rate cycle will increasingly play against the dollar, as central banks pivot from rate hiking to rate cutting." <h2>Divergent Monetary Policies in Canada</h2> In Canada, the risk remains tilted towards further tightening. The Bank of Canada recently raised rates by a quarter-point to 5%, and the governor expressed readiness to take additional measures if necessary. <h2>Oil Prices Remain Steady, Gold Prices Flat</h2> Elsewhere, oil prices settled near a two-month high due to a weakened U.S. dollar. Brent crude futures increased by 0.2% to reach $80.29 per barrel, while U.S. West Texas Intermediate crude futures rose by 0.2% to $75.88.Conversely, gold prices remained flat at $1,957.09 per ounce. <h2>Summary</h2> The recent market developments reflect a positive sentiment in Asian shares and bonds, primarily influenced by the unexpected decline in U.S. inflation. As the Federal Reserve's hiking cycle nears its conclusion, investors and analysts are carefully evaluating trade data from China and reassessing market expectations for rate hikes and cuts. Furthermore, the weakening U.S. dollar has prompted shifts in various currencies, with the euro and the Japanese yen showing particular strength. As global monetary policies evolve, monitoring how central banks navigate the changing landscape remains essential to maintain stability and foster economic growth.

istockphoto-1365692242-1024x1024-transformed (1).jpeg

Experience the dynamic Asian market as shares rally and the dollar slides amidst speculations about the Federal Reserve's conclusion to the hiking cycle.

Newest & Recent

Find the lastest update

Popular of the day

Most watched posts

Forex Glossary

A to Z Forex abbreviations

Daily Analysis

Industry Experts posts

Pinned Tags

#trade360

#finexo

#fxtrading.com

#sky alliance markets

#amega

#ospreyfx

#fxglory

#fibo group

#ig global

#bdswiss

#lcg

#fxgrow

#legacyfx

#superforex

#simplefx

#rakuten securities

#ifc markets

#triumphfx

#world forex

#amana capital

china trade data

3 articles published related to#china trade data

Global Shares Slip as China Data Disappoints; U.S. Stocks Ri...

European Shares Slip as Richemont, Tepid China Data Drag

Market Update: Asian Shares Rally, Dollar Slides amid Specul...

Daily Analysis

Geo Politics