Economic growth concerns brew

US retail sales disappointment

Despite seeing the US earnings season kickstarting on a good note, the September retail sales watched for its indication of consumption health had been a disappointment. Coming in at a surprise decline of -3.0% month-on-month against the 0.3% consensus, this had been the first sub-zero reading and the lowest seen since February 2019. While there had been a building up of concerns from the soft indicators thus far, the extension of the impact into retail sales performance had certainly invited an increase of the scrutiny. The control group reading, which feeds directly into GDP accounting, had likewise disappointed, staying unchanged against the 0.3% expectation, building the downside risks for GDP and one that could invite the paring back of growth expectations for the US economy.

As it is, the market can be seen lifting its rate cut expectations and likewise battering the greenback. US dollar index, measured against six major currencies, was seen slipping to a near-2 month low, into Thursday. This is as the CME FedWatch tool reflected a lift in October’s rate cut view to 89% from 74% a day earlier. Do note that prices here can be seen edging towards the longer-term uptrend support, threatening a break. While the bearish bias is evident, the greenback had traditionally been one to stay resilient amid slowing global growth, thus expected to still stay largely supported going forward. Comparatively, it may be one to watch the likes of China’s data barrage into the end of the week to scrutinize the differentials in growth performance here.

Source: IG Charts

Caution warranted for Asia markets

Amid the mixed picture painted from both US earnings and economic data, and the noise swivelling within markets from both US-China relations and Brexit, Asia markets look to chart its own course into the session. Notably, there is a sense that Asia markets had largely been exhibiting a certain sense of resilience despite the latest threat of retaliation from China on the US’ interest to pass the pro-democracy bill on Hong Kong. It seems that the positivity from US earnings at the start of the week and hopes of an US-China mini deal had continued to carry the market, though just as with hopes for a Brexit deal, the sense of cautiousness continued to be warranted here.

Separately, Singapore’s September non-oil domestic exports arrived missing expectations, turning up at -8.1% year-on-year against the -7.0% consensus. The key electronic exports had likewise declined though by a smaller extent of 24.8% compared to the 25.9% in August. This marks the seventh consecutive month in which exports had been in red, continuing to paint the gloomy picture for the export sector. With the global climate on hand, this trend is looking unlikely for a turnaround in the near term. Certainly, for markets, this had perhaps come with little surprise, the local STI declining a slight 0.2% in the early hours and USD/SGD little moved.

Yesterday: S&P 500 -0.20%; DJIA -0.08%; DAX +0.32%; FTSE +0.61%