Market Talk - Monday, May 17


China’s factories slowed their output growth in April and retail sales significantly missed expectations as officials warned of new problems affecting the recovery in the world’s second-largest economy. Factory output grew 9.8% in April from a year ago, in line with forecasts but slower than the 14.1% surge in March, National Bureau of Statistics data showed on Monday. Retail sales, meanwhile, rose 17.7%, much weaker than a forecast 24.9% uptick and the 34.2% surge in March. In the factory sector, motor vehicle production growth fell sharply to 6.8% from 69.8%, due in part to the base effect as well as critical shortages of semiconductors used in car systems.

India’s economic activity has also started to feel the pinch as the second wave of coronavirus has destabilized the country’s medical infrastructure. Despite the central government refraining from announcing a national lockdown, economic risks have been mounting amidst state-level restrictions and partial lockdowns, due to which sectors like travel, tourism, hospitality and retail are expected to take a massive hit. The first signs were visible in the IHS/Markit Services Purchasing Managers’ Index (PMI) which eased to a three-month low of 54 in April from 54.6 in March. As localized lockdowns across states came in phases, the full impact on the contact sensitive service sector will only be seen in May as most state governments have extended lockdowns further.

A Reuters poll suggests that Japan’s economy is set to grow much slower than previously hoped this quarter, hobbled by extended emergency measures put in place to halt a rise in coronavirus infections. The poll shows It is likely to expand an annualized 1.7% this quarter, less than half the 4.7% projected last month. Nearly all of the economists polled believe the government will compile an extra budget to support the world’s third-largest economy, with 60% expecting it to come before the end of the third quarter.

The major Asian stock markets had a mixed day today:

  • NIKKEI 225 decreased 259.64 points or -0.92% to 27,824.83
  • Shanghai increased 27.24 points or 0.78% to 3,517.62
  • Hang Seng increased 166.52 points or 0.59% to 28,194.09
  • ASX 200 increased 9.40 points or 0.13% to 7,023.60
  • Kospi decreased 18.80 points or -0.60% to 3,134.52
  • SENSEX increased 848.18 points or 1.74% to 49,580.73
  • Nifty50 increased 245.35 points or 1.67% to 14,923.15

The major Asian currency markets had a mixed day today:

  • AUDUSD decreased 0.00121 or -0.16% to 0.77683
  • NZDUSD decreased 0.00346 or -0.48% to 0.72137
  • USDJPY decreased 0.19 or -0.17% to 109.15
  • USDCNY increased 0.00388 or 0.06% to 6.44358
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