The latest data suggests that China’s economy has stabilized last month
Wall Street stocks edged higher on Thursday as investors cheered solid economic data. August retail sales came in better than expected, jumping 0.6% against an expected rise of just 0.1%. Excluding autos, retail sales rose 0.6% last month, also exceeding expectations. The producer price index increased a seasonally adjusted 0.7% in August and 1.6% on a year-over-year basis to come in higher than expected. The Dow Jones climbed nearly 1% to rally the most in over a month. The S&P 500 gained about 0.84%, while the Nasdaq Composite moved 0.81% higher.
Following suit, Asian equity markets rallied on Friday after fresh data showed that China’s industrial output rose 4.5% in August from a year earlier, up from 3.7% in July. Retail sales exceeded forecasts as well, suggesting the country’s economy has stabilized last month. Still, the Shanghai Composite index was down nearly 0.3% in afternoon trading to buck the trend, while Hong Kong’s Hang Seng surged 1.03%. Japan’s benchmark Nikkei 225 added 1.11%, Australia’s S&P/ASX 200 jumped 1.3% and South Korea’s Kospi added 1.1%. MSCI’s broadest index of Asia-Pacific shares was up 0.7%.
In Europe, equities also rallied, buoyed by ECB’s dovishness and upbeat Chinese data. The ECB hiked its key interest rate to a record 4% on Thursday. At the same time, Governing Council members said they do not expect further rate hikes at this time, and that rates may be held steady for some time. Europe’s Stoxx 600 index gained nearly 1% in early deals after a rally by 1.5% yesterday. On the data front, French consumer prices rose 4.9% on the year in September, more than the 4.8% expected. US stock index futures were cautiously higher after yesterday’s rally.
The dollar stays elevated ahead of the weekend, clinging to the upper end of the extended trading range after rallying to fresh March highs just below the 105.50 zone. The USD index has settled above 105.00, holding in positive territory during the European hours after a slight retreat in Asia. The greenback is supported by a weaker euro in the aftermath of a so-called “dovish hike” by the ECB. On the other hand, the bullish potential is limited by positive risk sentiment across the financial markets.