Markets aren't paying too much attention just yet but they should
- China industrial profits in April -3.7% y/y (March was an outlier at +13.9%)
- China Retail sales for April: 7.2% y/y (expected 8.6%)
- China April Industrial production: 5.4% y/y (expected 6.5%)
- China Fixed asset investment (excl rural) for April 6.1% y/y (expected 6.4%)
- China April official Manufacturing PMI: 50.1 (expected 50.5)
- China April official Services PMI: 54.3 (expected 55.0)
- China - Caixin/Markit manufacturing PMI: 50.2 (expected 50.9)
Earlier today we saw industrial profits slump by 3.7% when compared to the same period a year ago, which signals that exports and industrial activity have continued to slow as we start getting more Q2 data to work with.
Markets are still rather calm on a collective front as the focus remains on the US-China trade rhetoric instead. However, unless we see a quick panacea to resolve the situation - which we won't - then economic data in the coming months will likely continue to support further headwinds for the global economy in general.
Month-end flows may help see equities and risk assets recover some poise after a solid beat down in May but as long as global trade remains in a fragile state, then there's still downside risks to consider in the months ahead. As always, keep a close eye on Chinese data. As the saying goes, "when China sneezes, the rest of the world catches a cold".
Here's a rundown of how global equity indices have performed so far in May (it may seem bad at first glance, but on a year-to-date basis all the indices listed are up):
- Dow -3.8%
- S&P 500 -4.1%
- Nasdaq -5.7%
- Eurostoxx -4.7%
- UK FTSE 100 -1.9%
- DAX -2.7%
- CAC 40 - 4.8%
- Nikkei -4.9%
- Hang Seng -8.5%
- CSI 300 -8.2%
