Via Bloomberg
The Hang Seng (-2.00%) and the Shanghai Composite (-4.50%) were lower on Thursday due to the drop in China's retail sales. The print came in at -1.8% vs +0.3% expected and the market focused on this data as it knocked investors confidence of a fairly swift global economic recovery. See print below:
Take a look behind the data
However, looking at the breakdown of the data shows a better picture than the headline print indicates. Most sectors are actually showing growth. In fact only 6 of the 16 sectors contracted during June. The rest of the sectors put in strong monthly recoveries and some sectors even grew faster than the same period in 2019. Automobiles, accounting for 10% of all retail sales, fell from a one-off high level from last year. There are suggestions that the petroleum and related products sector might have been impacted by adverse weather (torrential rains) in Southern China which resulted in construction projects being cancelled.
A market biased to the upside
With markets showing a bias to positivity then it should not be too hard to look through this retail sales data. A rising concern at the moment is the US COVID-19 cases. US COVID-19 cases rose by a record 68,428 in 24 hours according to the John Hopkins tracker. Texas cases increased by 10,291 to a total of 292,656 which was the 4th largest increase in record and deaths rose by 129 to 3,561 which was the largest single day increase.
