Macro Roundup (Jul 17)

SHANGHAI, Jul 17 (SMM) – This is a roundup of global macroeconomic news last night and what is expected today.

The US dollar rose on Thursday while global stocks fell, as investors reacted to a mixed batch of economic data out of China and the US.

The US dollar index, which measures the currency against a basket of rivals, gained 0.29% to 96.250, after four consecutive days of losses.

Mainland Chinese markets led the losses in stocks, plummeting more than 4%, despite data released earlier in the day showing a rebound in the China’s economy.

China on Thursday reported that the country’s GDP grew by 3.2% in the second quarter of this year as compared to a year ago. This beat analysts’ expectations of 2.5% growth and rebounding from the first quarter’s contraction.

Data published Thursday also showed that China's industrial output rose 4.8% in June from a year earlier, expanding for the third straight month and offering some relief to an economy trying to regain its footing from the shock of the coronavirus outbreak earlier in the year.

Retail sales, however, fell 1.8% on-year in June, much worse than a predicted 0.3% growth, after a 2.8% drop in May. Sales fell for five straight months as shops, restaurants and other crowded places closed during the pandemic. Though strict containment measures have been relaxed, consumer demand has not responded correspondingly in a sign of the far reaching impact of the coronavirus.

Fixed asset investment fell 3.1% in the first half of the year from the same period last year, compared with a forecast 3.3% fall and a 6.3% decline in the first five months of the year.

US retail sales, meanwhile, increased for the second consecutive month in June, according to a report from the Commerce Department. Retail sales jumped 7.5% last month, topping a forecast of a 5.2% gain. June’s sharp gains come after sales surged by a record 17.7% in May.

A separate report from the US Labor Department on Thursday showed 1.3 million people filed for state unemployment benefits during the week ending July 11, slightly down from 1.31 million in the prior period.

The European Central Bank opted Thursday to keep its interest rates and emergency coronavirus stimulus program unchanged, while it monitors the economic strength of the eurozone.

Investors also looked ahead to the upcoming EU summit, at which European countries are expected to vote on a 750 billion euro ($856 billion) recovery fund to revive euro area growth.

Geopolitical tensions may also have weighed on investor sentiment regionally, with U.S. Secretary of State Mike Pompeo saying Wednesday that the country will impose visa restrictions on Chinese tech firms, a move expected to strain relations between Washington and Beijing.

Oil prices dipped on Thursday after OPEC and other producers including Russia agreed to ease record supply curbs from August, though the drop was cushioned by tightening global inventories as economic activity picks up.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed on Wednesday to scale back oil production cuts from August. They will reduce their cuts to 7.7 million barrels per day through December from the 9.7 million bpd cuts in place since May.

Nonferrous metals traded mixed on Thursday. On the LME, nickel dropped 1% on the day, lead fell 0.8% and aluminium shed 0.6%, while copper inched up 0.2%, tin advanced 0.3% and zinc rose 0.6%.

SHFE metals performed similarly in overnight trading, after falling across the board in the previous session. Lead tumbled 1.2%, aluminium declined 0.4% and nickel sank 0.3%, while copper climbed 0.5%, tin rose 0.6% and zinc moved 0.9% higher.

Eurozone’s consumer inflation data for June, US housing starts for June and the University of Michigan’s consumer sentiment index for July are slated for release on Friday.