Asian stock markets grew on Friday morning due to hints of new stimulus from the Chinese government. The Asia Pacific MSCI added 0.2% on Friday morning, while the Shanghai Blue Chip Index China A50 increased by 0.8%.

The promise of stimulus did not contain any details other than assurances around boosting disposable income. Apparently, the Chinese authorities are trying to strengthen domestic demand in this way, in an attempt to support the economy in the context of trade disputes with the US.

At the same time, debt markets remain cautious, noting the increased demand for protective government bonds – a clear sign of concerns around long-term growth rates. Furthermore, the latest macroeconomic data convinces us that the cautious expectations of the debt markets that is a more justified approach than the optimism of the stock market.

The US reported very strong retail sales data yesterday. Retail sales in the world’s largest economy spiked by 0.7% against the expected growth of 0.3%.

In our view, the growth of retail sales in the US and UK is a rather bad sign for the economy. In the US., consumers may be in a hurry to buy goods before the introduction of new tariffs for supplies from China, which will raise the price of goods. A few months ago, this spike was on the companies' side, and now the wave of frontloading has reached consumers, as the tariffs are already applied to consumer electronics.

At the same time, U.S. capacity utilization has been declining steadily since February, and industrial growth fell from a peak of 5.4% YoY in September last year to just 0.5%.

The situation is similar in the UK, where retail sales grew by 0.2% in July instead of an expected decline of 0.3%. At the same time, the production rate decreased by 0.6% year-on-year. Faced with the decline of the pound and growing uncertainty about the consequences of Brexit, people are in a hurry to buy goods before anticipated price rises following withdrawal from the EU.

In China, a sharp slowdown is observed in both consumption and industry, that slowed to 17-year lows. The government's attempts to support domestic demand, in this case, can only have a very short-term positive impact on the economy. If trade disputes and uncertainty continue to erode production, a temporary surge in consumer activity will not be able to reverse the trend of economic growth weakening.

FxPro UK Limited is authorised and regulated by the Financial Services Authority, registration number 509956. CFDs are leveraged products that incur a high level of risk and it is possible to lose all your capital invested. Please ensure that you understand the risks involved and seek independent advice if necessary.

Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing, investment advice or an investment recommendation or, an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. FxPro does not take into account your personal investment objectives or financial situation. FxPro makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied by any employee of FxPro, a third party or otherwise. This material has not been prepared in accordance with legal requirements promoting the independence of investment research and it is not subject to any prohibition on dealing ahead of the dissemination of investment research. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of FxPro. This communication must not be reproduced or further distributed without the prior permission of FxPro. Risk Warning: CFDs, which are leveraged products, incur a high level of risk and can result in the loss of all your invested capital. Therefore, CFDs may not be suitable for all investors. You should not risk more than you are prepared to lose. Before deciding to trade, please ensure you understand the risks involved and take into account your level of experience. Seek independent advice if necessary. FxPro Financial Services Ltd is authorised and regulated by the CySEC (licence no. 078/07) and FxPro UK Limited is authorised and regulated by the Financial Services Authority, Number 509956.

Analysis feed

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD accelerates decline and nears 1.1200

The US Nonfarm Payroll report’s effects are long gone. The greenback gets attention as stocks eased sharply from intraday highs, still holding in the green, yet undermined by record coronavirus cases in the US.

EUR/USD News

AUD/USD hovering around 0.6920 after a dull day

AUD/USD pair seesawed between gains and losses, settling for a second consecutive day at around 0.6920. Australian PMIs and Chinese services output coming up next.

AUD/USD News

Gold: Bears seeking justice below key support

XAU/USD has been a mixed bag this week and for the start of the month, trapping bears ina recent stop hunt from the $1,757.66 level where it met a high of $1,779.69 on the last session before the US long weekend. 

Gold News

Crypto collapse with Bitcoin falling below $9,000 and Ethereum getting close to $220

Most cryptocurrencies are experiencing a significant sell-off after Bitcoin fell below $9,000. BNB/USD has suffered the most with a 4% drop towards $15 and needs to hold $14.8 support. 

Read more

Oil: $40 per barrel has been broken again but there is a lack of conviction at these current levels

WTI has continued to move higher on Thursday but the price action seems pretty lacklustre despite volatility elsewhere. There have been some decent news stories in the past few sessions as it was confirmed OPEC output reached a two-decade low after over compliance from Saudi Arabia. 

Oil News

Forex Majors

Cryptocurrencies

Signatures