Relief Rally in U.S. Markets Weighed By Chinese Numbers

Eldon, Missouri – (StockNewsDesk) – 12/12/2014 — A slew of U.S. economic indicators reported yesterday pointed towards an improving economy. Almost all the data reported yesterday were above expectations, as a result of which, the broader indices S&P 500, the Dow Jones and the Nasdaq gained more than 1% during early trade; but it closed the day with gains of 0.6% up. However, crude oil prices and Chinese economy remain a spoil-sport in the process of economic recovery. Oil prices fell over 2% below $60 a barrel level while the Chinese industrial production and investment climate paint a gloomy economic picture.

Retail figures, which is a barometer to measure the U.S. economy increased well above expectations by 0.5%. The Street expected an increase of 0.1%. It is also greater than earlier period’s growth of 0.4%. The growth in retail sales were primarily led by holiday season and discount sale on Black Friday and Thanksgiving Day. Another economic indicator which played a role of an investment sentiment booster is the Initial Claims data. Number of Americans filing for unemployment benefits came in 3,000 below than expectations of 299,000. These two factors are mainly responsible for lifting investor sentiment. Apart from this, the Bloomberg Consumer Confidence data came in above expectations at 41.3.

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Chinese Factory Orders, Investment Disappoints

Chinese economy, yet again, showed signs of slower growth in the economy. Factory output of the country grew 7.2% compared to expectations of 7.5%. The investment expansion of the country is near a decade low. For the fourth quarter, there is a very chance that the economy would expand at just 7%, lowest in more than 3 decades. Housing sector has been a primary reason for the slowdown. There is a massive inventory of home that are not sold, choking the cash flow. If the government persuades banks to further reduce the interest rates, it may remove the choke and revive the housing sector putting the economic recovery back on track. With such economic indicators, investors expect further easing of stimulus measures.

Relief Rally in U.S. Markets Weighed By Chinese Numbers

In North China, many factories could not contribute to the factory output as it remains closed to control pollution. This is partly responsible for the decline in factory output. Among investments, fixed-asset investment grew 15.8% while real-estate investment declined to 11.9% from earlier period’s reading of 12.4%. Retail sales data is the only reason that can cheer investors. Consumption of retail items grew marginally to 11.7% from October’s reading of 11.5%. However, the growth was at its slowest pace since 2006.

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