Weak Chinese inflation data raises hopes of further stimulus

Tuesday, November 10, 2015

Further signs of weakness in China prompted investors to selloff. The Hang Seng index plunged over 300 points (-1.43%) towards 22,400 while the Shanghai Composite Index slid lower by 0.20% towards 3,640. China’s CPI rose 1.3% y/y in October compared to 1.6% in September, missing analysts’ expectations of a 1.5% rise, showing the lowest level since May 2015. China’s PPI declined 5.9% y/y in October, in line with expectations.

The disappointing Chinese economic data weighed on market sentiment but raised hopes of possible further stimulus in the Chinese economy. Base metal prices came under renewed pressure in early trade this morning amid concerns of weaker metals demand from China. Copper extended declines towards $4,920, reaching a six-week low while aluminium dropped over 1.2% below $1,500.

China's inflation data raises hopes of further stimulus 

CNCPIYOY Index (China CPI Yo Y)   2015-11-10 08-47-56

European equity markets rebounded and climbed higher in early trade this morning as the DAX, CAC, IBEX and London equity benchmark indices gained between 0.20% and 0.50%. The euro hovered around 1.0750 against the USD, struggling for direction. France’s industrial production rose marginally by 0.1% m/m in September, beating estimates of a 0.4% drop. In the UK, BRC retail sales dropped slightly by 0.2% in October, missing expectations of a 0.8% rise.    

Today, market participants will be keeping an eye on the release of the import price index as well as wholesale inventories data for October and September, respectively. The USD index continues its strong uptrend, holding above 99.0 against a basket of currencies and weighing further on most commodity prices.

USD index holds above 99.0 against a basket of currencies

DXY Curncy (DOLLAR INDEX SPOT)   2015-11-10 08-49-27

 

Events for today:

0530

CN

Oct

CPI & PPI

1330

US

Oct

Import Price Index

1500

US

Sep

Wholesale Inventories

 

All times UK Local Time

Topics: USD, Asia, China, Europe, Inflation, EUR, CPI
More from: Myrto Sokou