Disappointing economic numbers out of China overnight weighed on Asia Pacific markets overnight as Hong Kong plunged 1.8%, Tokyo lost 0.5% and Sydney slipped 0.3%. Talk of increased casino regulation in Macau, meanwhile, has weighed on casino stocks around the world.
Chinese retail sales (2.5% vs street 7.0% and previous 8.5%), industrial production (5.3% vs street 5.8% and previous 6.4%), and fixed asset investment (8.9% vs street 9.0% and previous 10.3%), all slowed even more than investors expected.
Surprisingly, this news has not negatively impacted commodity prices. Usually China-sensitive copper is up 0.4% today. Energy contracts are soaring today with natural gas up 3.3%, WTI crude oil up 1.4% and gasoline up 1.2%. These gains appear to be related to a bigger drawdown in weekly API oil inventories (-5.4 mmbbls vs previous -2.9 mmbbls) likely due to ongoing disruption in US Gulf of Mexico production from Hurricane Ida being quickly followed by Hurricane Nicholas. US DOE weekly oil inventories (previous -1.59 mmbbls) are due at 10:30 am EDT this morning.
US index futures are flat to up 0.1% as investors digest yesterday’s losses of 0.4% to 0.6% for US indices and we continue to work through September. Inflation reports are dominating this morning’s economic calendar with consumer price numbers out from Canada (4.1% vs street 3.9% and previous 3.7%), and the UK (3.2% vs street 2.9% and previous 2.0%) both showing that price pressures continue to build, adding to the case for central bank tapering.
In the US this morning, the Empire State Manufacturing Survey came in a lot stronger than expected (34.3 vs street 18.0). US industrial production is due at 9:15 am EDT (street 0.5% vs previous 0.9%).
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Chief Market Strategist appeared on BNN Bloomberg where he discussed current market trends, risks, inflation and sector rotation.