The lift gained from Tuesday’s trade war twist – the US announced tariffs on certain items would be delayed until December 15th – failed to carry over to Wednesday morning, the mood undermined by weak data from both China and Germany.
First, China. Fixed asset investment fell from 5.8% to 5.7% month-on-month, missing out on the estimated bounce. There were sharper declines in industrial production, from 6.3% to a far worse than forecast 4.8%, and retail sales, which dropped from 9.8% to 7.6%. All this, but especially those industrial numbers left the FTSE’s commodity sector in a bit of a state. However, the index itself avoided any serious losses, dropping around 10 or so points.
Echoing China’s slowdown was Germany’s preliminary Q2 GDP reading. A 0.1% contraction puts the country on track for a recession, and helped send the DAX half a percent lower after the bell. Run-off bad vibes impacted the CAC, which slipped 0.4%.
Sitting on its hands was the pound, unchanged against both the dollar and euro ahead of the UK’s latest inflation readings. Sterling didn’t get a whole lot out of yesterday’s very strong wage growth data – it was up against its single currency rival, but is still a sneeze away from a 10-year nadir – and may struggle to pay attention to the CPI figures, especially since analysts are expecting a slip form 2.0% to 1.9%.
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