Global data showing trade-war strain

Asia

Asian indexes this morning are strongly in recovery mode, China’s are up in the 2% region, the Hang Seng nearly 1% and the Nikkei up a half. Still, Chinese data overnight came in negative, Retail sales were down a percent to a 16-year low of 7.2% in April, industrial production down 3% to 5.4% and fixed asset investments to 6.1%.

Australia’s consumer confidence lost 2/3 and is currently at an 0.6% incline towards 101.3 in May, with wage indexes flat. The geopolitical news, moreover, has been bad for the Australian dollar, which broke support at 0.6940 and is currently edging towards a 3-year low.

US

US releases are feeling the brunt of the trade wars as tariffs hit consumer pockets. Yesterday’s import/export prices were all below expectations, the former contracting by 0.2%; the Redbook index lost ½% and came in at 5.4% for May 10, and only the NFIB’s small business optimism index showed a 2-point rise to 103.5 in April (though how it will react to the latest tariff war developments is hard to say).

Europe

With economic sentiment at minus 1.6 and industrial production exceeding expectations at a 0.6% contraction (sic), the situation in Europe is far from stellar. UK employment yesterday shows a 1/10% decrease in unemployment to a 45-year record low but a 0.3% reduction to 3.2% in earnings growth.

Germany’s economic sentiment is in contractionary territory at -2.1, but ZEW’s measure of investor sentiment shows a 3-point increase to 8.2 in May. This morning, Germany downgraded its preliminary GDP for Q1 by a third to 0.6% growth YoY, boding bad for the zone’s figure later this morning. Still, a glimmer of light this morning comes from France, where consumer inflation is up to 1.5% YoY for April.

Commodities

As markets recuperate on what may be short covering, gold is back into a downward trend after a dramatic $20 surge on the apparent launch of a full-scale trade war in the form of China’s retaliatory tariffs.

Expectations, though, that this will result in heightened risk-driven demand in China is currently muting the fall. Oil is receiving some upward momentum after Saudi installations were attacked yesterday – this following the sabotage of 2 tankers, both events blamed on Iran. The result is a relatively muted response to yesterday’s API report of an additional 8.6mB in the reserve tanks.

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