Originally published by Rivkin Securities
The S&P 500 opened higher last night and held onto the gains for the rest of the session. The bounce comes as North Korean tensions eased slightly, which caused a resumption in the risk-on trend. The S&P 500 closed 1% higher although this still leaves it around 1% lower than the high of last week.
Yesterday China released a series of economic data points, all of which were weaker than expected. Industrial production came in at 6.4%, below the 7.1% expected, retail sales were up 10.4% which was 0.5% below consensus and fixed asset investment was up 8.3%, lower than the 8.6% expected. Overall the data painted a picture of a weaker than expected Chinese economy which may have contributed to the sell-off in the Aussie dollar yesterday. The dollar closed near the low of the session at around US$0.785.
Gold sold off overnight as part of the risk-off shift although it closed slightly off the lows for the session at US$1,281. Oil was also a loser for the session with WTI falling back to a $47 handle, partly on news that Chinese refinery output fell significantly in July compared to the prior month. This, coupled with the weaker than expected economic data out of China, fuelled fears that Chinese oil demand may be tempering.
Today we get the minutes of the most recent monetary policy meeting of the Reserve Bank of Australia (RBA) which are expected to show little change from the prior month. Although the RBA still thinks the next interest rate move will probably be up, it doesn’t expect rates to change anytime soon.
Data Releases:
- RBA Monetary Policy Meeting Minutes 11:30am AEST
- UK CPI 6:30pm AEST
- US Retail Sales 10:30pm AEST
- US Empire State Manufacturing Index 10:30pm AEST