Asian Stocks Talking Points:
- Equity was weaker across the region
- Chinese retail and industrial numbers came up short
- Currency markets were steadier
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A slew ofweaker Chinese economic datakept 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.
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.
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.
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--- Written by David Cottle, DailyFX Research
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