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Asian Stocks Weaker As China Data Underwhelms, Fed Eyed

Asian Stocks Weaker As China Data Underwhelms, Fed Eyed

David Cottle, Analyst


Asian Stocks Talking Points:

  • Equity was weaker across the region
  • Chinese retail and industrial numbers came up short
  • Currency markets were steadier

Find out what retail foreign exchange investors make of your favorite currency’s chances right now at the DailyFX Sentiment Page

A slew of weaker Chinese economic data kept Asia Pacific stock markets under pressure Friday, even as investors looked ahead to next week and the final US monetary policy decision of this busy year.

China reported that retail sales rose 8.1% in November, well below the 8.8% expected and the weakest showing since 2003. Industrial production rose by 5.4%. This was the slowest pace since early 2016. Auto sales were also very weak, mirroring industry data.

The numbers only added to evidence that China’s economy is slowing, and they underlined the importance of an early, durable end to the trade tensions which have dogged relations with the US all year. By contrast Japan’sTankan business survey was much steadier, at least in terms of current conditions. The outlook was unsurprisingly a lot more dubious. Still, the markets focused more on China’s dilemma. The Nikkei 225 was down 1.8%, with Shanghai off by 0.5%. The Hang Seng shed 1.4% and the ASX 200 was 1% lower at the close.

In the currency markets the Australian Dollar took a modest hit on those Chinese numbers, but it made back most of its losses. Focus is clearly on the US Federal Reserve which will meet to set policy next week. Another interest rate rise is expected but the central bank’s views on how many more may come in 2019 will be key.

AUD/USD remains broadly supported by the idea that the drum-beat of US rate rises could slow, or even stop, next year. This allowed the Aussie to snap the downtrend which had previously dominated trade all year.

Australian Dollar Vs US Dollar, Daily Chart.

However, the markets do seem to be overlooking to some extent the fact that the Australian Dollar has no likely interest rate support in sight either. They may return to this theme.

The Euro stabilized after Thursday’s losses which were incurred when the European Central Bank announced that it was ending new bond purchases as it winds in some stimulus.

Crude oil prices slipped, reportedly as some investors booked profits in the face of that Chinese data miss. Gold prices were steady as markets looked to the Fed.

There is plenty of economic life left in Friday, even as Asian markets wind down. US November retail sales will top the bill in terms of likely investor interest, but a slew of Purchasing Managers Indexes from both sides of the Atlantic will also command attention. Central bank watchers can await the European Central Bank’s Vice President Luis De Guindos and Executive Board member Sabine Lautenschlager, both of whom are due to speak. US industrial production data are also coming up.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.