Coffee With Greta: Chinese Economy Slows Unexpectedly
DJIA Futures: -186 (-0.6%)
SPX Futures: -25 (-0.6%)
NASDAQ Futures: -49 (-0.4%)
Good morning friends!
Futures are falling on concerns over slowing economic growth in China.
Let’s get right to it!
Chinese Economy Slows Unexpectedly
The Chinese economy slowed unexpectedly in July.
New data shows industrial production rose 3.8% year over year, down from 3.9% in June and lower than the 4.5% growth expected by economists.
Retail sales rose just 2.7% annually vs 3.1% in June and lower than expectations for 5% growth.
Fixed asset investment from January through July rose 5.7% year over year vs 6.2% expected.
China’s statistics bureau warned of rising “stagflation risks” around the globe.
Oil Prices Drop on Chinese Economy Concerns
Oil prices are falling today on demand concerns from China after the country’s economy slowed in July.
West Texas Intermediate crude futures are down over 5% to $87 bbl while Brent crude futures are down 5% to $93 bbl.
Refinery output also slowed in China last month to 12.53 million barrels per day, the lowest since March 2020.
Empire State Manufacturing Index Plunges
The Empire State manufacturing index tumbled further into negative territory this month.
The New York Fed survey plummeted 42.4 points to negative 31.3.
That’s the second largest monthly decline on record and one of the lowest reading in survey history.
That drop was far below economists’ expectations for a reading of 5 with any reading below 0 signaling deteriorating business conditions.
The new orders index plunged 35.8 points to negative 29.6.
The shipments index plummeted 49.4 points to negative 24.1 and unfilled orders fell for the third month in a row.
This data and the Philadelphia Fed’s manufacturing survey are both seen as early indicators for the health of the entire U.S. manufacturing sector.
Retail Sector In Focus
Traders will have their focus on earnings from some big retailers this week.
Walmart (WMT) and Home Depot (HD) are both scheduled to report Q2 results ahead of the open on Tuesday.
Target (TGT) and Lowe’s (LOW) will report during premarket hours on Wednesday, followed by Kohl’s (KSS) Thursday morning.
The market will be focused on how each company has been impacted by inflation so far and forward guidance for the business as consumer behavior has shifted.
The Commerce Department also reports July retail sales Wednesday morning.
Homebuilder Sentiment Expected to Slip
The National Association of Homebuilders releases its August sentiment index at 10:00 a.m. ET.
That survey is expected to have slipped further to 54 following the historic 12-point plunge to 55 in July.
Builders have turned pessimistic about the rapidly slowing housing market as mortgage rates continue to rise.
The housing market will be in focus throughout the week with July housing starts and building permits Tuesday morning and July existing home sales on Thursday.
In Case You Missed It
- The House passed the Democrats’ Inflation Reduction Act on Friday. The $430 billion legislation was approved by a 220-207 vote along party lines. It includes funding for climate and energy policies, prescription drug pricing initiatives, boosting the IRS, and new corporate tax laws. President Biden is now set to sign the bill into law.