Global stocks rose on bargain buying as the trading and investment week opened, but China’s zero-COVID policy woes weighed on sentiment.
Lockdowns in the Asian giant pressured retail and industrial activity down to the lowest level in two years, triggering further fiscal and monetary stimulus to the economy. In April, annual retail sales fell by 11.1 percent, while year-on-year industrial production dropped by 2.9 percent.
China’s growth slump could feed into its trading partners’ economies in the short term. The US, EU and UK all trade heavily with China. These economies are already battling high inflation and rising interest rates, with China’s COVID woes adding yet another challenge.
Luxury retailers in the EU may feel the pinch because China is both a major production center and sales center for high-end products like handbags, cosmetics, clothing and shoes. Auto-makers like Tesla and Toyota are also likely to be affected by the lockdowns.
Shares earnings reports today
Several large-cap listed companies are set to release first-quarter earnings today, including Home Depot (HD) and Walmart (WMT).
Earnings-per-share at Home Depot are expected to be at the level of 3.66 USD and the stock’s price could move depending on whether investors are satisfied with the company’s performance. Walmart’s EPS is estimated at 1.46 USD. Both retailers are facing inflation headwinds and today’s reports should shed some light on the economic situation on the ground in the US.
Commodities trading news
Crude oil spot prices take the lead in today’s commodities trading news. There was a 10 US Dollar rise in the space of 24 hours as geopolitical events in Ukraine sent tensions through the oil markets. On top of that, OPEC recently signaled its intention to keep supplies tight after cutting its world growth and oil demand outlooks. OPEC forecasts world growth at the level of 3.5 percent versus 3.9 percent previously. The group sees demand for oil growing at the level of 3.36 mbd in 2022 compared to 2021.
Currency trading news
The UK announced the quarterly unemployment rate for March. The consensus was for an unemployment level of 3.8 percent on an annual basis against a background of high inflation and relatively low growth. Recession fears are simmering, meaning that anything unexpected could have an impact on the GBP crosses. The actual result was 3.7 percent.
The EUR takes the spotlight later this morning with the release of Eurozone first-quarter GDP results. They’re expected to be at the level of 5 percent on an annual basis and 0.2 percent on a quarterly basis. Have traders sufficiently priced in the effects of the conflict in Ukraine and inflationary headwinds? The results will soon tell us more.
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.