UK CPI growth accelerates for the first time in 10 months

Hang Seng

Hong Kong's Hang Seng dropped on Wednesday as China's economy grew 5.2% in the fourth quarter from a year earlier, missing analysts' expectations of 5.3%. For the full year 2023, the economy grew 5.2%, data from the National Bureau of Statistics showed, surpassing Beijing's growth target of around 5%, partly helped by the previous year's low base effect.

December activity indicators

December activity indicators released along with the gross domestic product (GDP) data on Wednesday showed factory output growth quickened at the fastest pace since February 2022, up 6.8%, but retail sales grew at the slowest pace since September, by 7.4%. As for fixed asset investment, it grew 3%, marginally beating expectations of a 2.9% rise. NBS also said December new home prices fell at their fastest pace in nearly nine years, by 8.5%. New construction starts plunged 20.4%.

The UK consumer price index

The UK consumer price index rose more than anticipated in December, sending the pound higher against all major currencies. Headline consumer price index (CPI) rose 4%, the first acceleration in 10 months.

US retail sales

Over in the US, retail sales are forecast to rise by 0.3% in December month-over-month (MoM), at the same pace as the prior month. November's data suggested a relatively strong start to the holiday shopping season, with the biggest increase recorded in food services and drinking places, up 1.6%, and non-store retailers, up 1%. Industrial production is forecast to fall by 0.1% compared to the previous month. As for the National Association of Home Builders (NAHB) housing market index, it is expected to marginally rise to 38 in January from 37 in December. December, which was the first rise in five months.

US dollar

Meanwhile, the USD rose to a one-month high yesterday as Fed Board member Christopher Waller said the path of policy change must be carefully calibrated, not rushed.

His words come a day after Atlanta Fed President Raphael Bostic said inflation could "see-saw" if the central bank cuts rates too soon. After Waller's comments, Fed funds futures were pricing a 60% chance of a rate cut in March, down from about 70% earlier.

Galliford Try

Elsewhere on the equity market, Galliford Try now expects revenue to be around 5% higher than previous expectations, and Just Eat Takeaway.com raises its full-year profit forecast.

Alcoa

Alcoa will report after the US closing bell tonight. The Street anticipates a loss of 81 cents per share on revenue of $2.61 billion. 2023 was a tough year for the group, which only managed to publish one quarterly profit out of four. Sales haven't improved either, range-bounding all year between $2.6 billion and $2.7 billion.

Despite a slight rebound in the last three weeks of 2023, aluminum prices remained weak most of last year, mainly driven by concerns about the real estate market in China, which led to slower demand from the construction sector.