Morning Brief – GDP and Minutes

The market mood remains off, despite China’s Q1 GDP data and retail sales numbers for March impressed but that wasn’t enough to get markets excited to start the day.

It could be that the optimism has already been priced in by the market, as the strong rebound in activity comes after China lifted Covid-19 restrictions in December last year.

China’s retail sales increased by 10.6% from the prior year in March 2023, sharply quickening from a 3.5% gain in the prior month and easily exceeding market forecasts of 7.4%.

This was the fastest growth in retail trade since June 2021, as sales picked up strongly for gold & silver jewellery, clothing, personal care, and cosmetics. Also, there was a strong rebound in sales of automobiles, communications equipment, and tobacco & alcohol.

Meantime, sales growth slowed for both furniture and oil products, amid further declines in sales of home appliances, office supplies, and building. Considering the first three months of the year, retail trade expanded by 5.7%

Asian equities did attach some themselves to some optimism from Wall Street overnight, with the Nikkei up 0.6% on the day. The Shanghai Composite is flattish, while the Hang Seng is keeping lower by 0.7% despite the upbeat data domestically.

The Aussie dollar is the only currency seen slightly higher, also reacting to the RBA minutes, which suggested that the central bank was “considering” a rate hike at its April meeting two weeks ago.

It is interesting to note that they did “consider” a rate hike earlier this month but let’s be real, actions speak louder than words, especially at this point in the tightening cycle.

The Minutes revealed that the “Board considered rate hike in April, before deciding to pause” and the RBA “Agreed that there is a stronger case to pause and reassess the need for tightening.”