China’s growth weighs on other markets

In the U.S., inflation was lower than forecast in August but still elevated, leaving the debate about whether price pressures are transitory unresolved. Tuesday’s U.S. inflation print could be seen as reducing pressure on the Fed to start pulling back on loose monetary policy, investors remain wary of a range of obstacles. These include the impact of the delta virus variant and rising costs on economic reopening, as well as China’s drive to rein in private industries. Contracts on the S&P 500 and Nasdaq 100 edged lower. The S&P 500, the NASDAQ and the Dow Jones Industrial Average did end losing 0.6%, 0.45% and 0.8% respectively.

With the weak retail sales and industrial production data coming in weak from China, the European stock markets are expected to trade in a subdued fashion. There would be focus on the retail sector as the likes of H&M and Inditex will be releasing their quarterly earnings. As at 07:02 GMT, the DAX futures contract in Germany was up by 0.08% while the CAC 40 futures in France was down 0.09%.

A salvo of economic data from China earlier Wednesday suggested that the world’s second largest economy, and the main regional growth driver, hit a speed bump in August thanks to Covid-19 outbreaks and supply disruptions. We saw retail sales grow 2.5% year on year, which is a sharp drop from July’s 8.5% growth and at the slowest pace since August 2020, while industrial output grew 5.3% year-on-year, its weakest pace since July 2020. The Hang Seng HIS in Hong Kong slid 1.5% to 25,117.71 while the Shanghai Composite Index SHCOMP lost 0.2% to 3,655.30.

Oil prices strengthened on Wednesday, boosted by a larger than expected drawdown in U.S. crude stocks coupled with expectations of a substantial recovery in demand as countries get on top of the recent Covid-19 outbreak. Crude oil supply data from the American Petroleum Institute, released late on Tuesday, showed a hefty draw of 5.4 million barrels last week, after Hurricane Ida shut numerous refineries and offshore drilling production. Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day, for confirmation. Brent for November settlement rose 0.8% to $74.15 a barrel on the ICE Futures Europe exchange at 7:02 a.m. in London. WTI for October delivery gained 0.6% to $70.89 a barrel on the New York Mercantile Exchange.

Taking center stage in the SSA sovereign debt space yesterday was Access Bank of Nigeria Plc, issuing a new 5yr Eurobond to the size of $500m. Final guidance of the paper came in at 6.125%, it is worth noting that book orders for the issue was over $1bn.