US futures are trading mix as investors pay attention to China’s economic data and the course that the Federal Reserve might take with interest rates, A disappointing report for retail sales highlighted how much the economy has the potential to profit from the recent efforts of the government to revise Covid regulations. As a result, shares soared in Hong Kong and mainland China. A measure of Asian stocks was on its way to its best level in the last two months, while futures contracts for the S&P 500 and Nasdaq 100 were increasing. Both the dollar and rates on U.S. Treasuries maintained their recent gains.
Chinese Economic data
The Chinese economy hit in October due to deteriorating Covid outbreaks throughout the nation, which harmed consumer mood and hindered corporate activity. Additionally, a dip in the housing market showed no indications of improvement during this period. According to new information released today by the National Bureau of Statistics, retail sales fell for the first time since May, resulting in a year-over-year decline of 0.5%. A poll by Bloomberg found that most respondents anticipated growth of 0.7%. The expansion of industrial production slowed to 5% from 6.3% in September, which was lower than the consensus expectation of 5.3%. During the first ten months of the year, investment in fixed assets climbed by 5.8%, somewhat lower than expected. The unemployment rate that was assessed remained the same at 5.5%.
A New Windfall Tax
The Chancellor of the exchequer in the United Kingdom, Jeremy Hunt, is considering adding a new windfall tax of forty per cent on the “excess returns” of electricity generators as part of his comprehensive package of tax hikes and spending cuts that he will announce this week. It is anticipated that the tax will take the place of a proposal that Prime Minister Rishi Sunak’s predecessor, Liz Truss, had in place to restrict instead the earnings of renewable and nuclear power companies beginning the next year. As part of the economic statement Thursday, a current windfall tax on the profits of oil and gas companies will be prolonged until 2028 and raised from 25% to 35%. This new charge will be in addition to that tax. It is believed that there is a vacuum in the public budgets of £55 billion ($65 billion), and Hunt and Sunak are working to fix it.
Inflation Moving In the Right direction
Francois Villeroy de Galhau, a member of the Governing Council of the European Central Bank, stated that indications that inflation may have reached its peak in the United States are a relief for policymakers around the world who have been increasing interest rates at a record pace to combat price pressures. The previous week’s data indicated a cooling trend in consumer prices in the United States, with inflation growing at a slower rate than anticipated in October. According to Villeroy, the United States has been ahead of the inflation cycle, making this a promising development in the fight against rising prices worldwide. In addition, he said that the strengthening of the dollar due to the Federal Reserve’s tightening monetary policy had a significant impact on the rest of the globe.
G20 and the war
A joint statement written for the summit on the Indonesian island of Bali says that most of the Group of 20 countries will condemn Russia’s war in Ukraine. The remark refers to a conversation during the summit concerning the effect the war would have on the global economy. The document references the “conflict in Ukraine” rather than “Russia’s war in Ukraine,” and its phrasing marks a compromise to secure the support of as many G-20 leaders as possible.
Biden and Xi
Henry Kissinger, a former United States Secretary of State, spoke at a conference in Bali and commended the resumption of negotiations between the United States and China. However, he noted that there is still a long way to go before a confrontation between the two greatest economies in the world can be avoided. Kissinger, now 99 years old, stated that the meeting between Vice President Joe Biden and President Xi Jinping on Monday kicked off in the right direction. This includes the restart of collaboration in areas such as addressing climate change and improving the global economy.