Chinese data provides relief after recent pullback

Global markets look set for a positive end to the week, with a raft of upbeat data out of China helping to reinvigorate stocks in the region. Bumper gains from both the Hang Seng (3.6%) and Shanghai composite (2.9%) helped provide the basis for a bullish end to the week in Europe and the US, with futures pointing towards another upbeat day on Wall Street. While the week has been largely dominated by the impact of non-US earnings from ASML and TSMC, yesterday’s impressive Netflix report looks to set it on course of a 5% gain at the open today.

With the Chinese rally having faltered of late, the raft of data released overnight provided an opportunity to show that the economy was on the right path. While the stimulus measures announced in late-September will have had little effect on the economy, we did see a welcome set of better-than-expected metrics spanning retail sales, industrial production, and unemployment rate. Meanwhile, the recent efforts aimed at restimulating the Chinese economy continued, with the financial regulator pushing financial institutions to increase liquidity in a bid to support the economic recovery.

The FTSE 100 has lagged behind its peers in early trade despite a better-than-expected retail sales report that saw both headline and ex-fuel metrics rise by 0.3%. Coming out of a period where elevated inflation led consumers to spend more but receive less, we are thankfully back on a path of seeing higher spending met with higher volumes of goods received. Coming off the back of Wednesday’s CPI-fuelled surge in the FTSE, today has seen the energy and mining stocks provide the only areas of strength amid selling pressure throughout the index. With markets still making up their mind over the likeliness of a rate cut at both November and December BoE meetings, improved spending metrics could see dovish expectations fade somewhat.