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China retail data surprise, big miners drop

china retail shop

The S&P/ASX 200 closed down 0.7% at 7097.40 on Tuesday, while the Australian dollar is slightly weaker against the US dollar at US71.82c. Markets in Japan and Singapore are higher, while China and Hong Kong and South Korea are falling. The NZX 50 closed 3 points lower for the day.

CNBC is reporting that China data showed better-than-expected growth in retail sales, fixed asset investment and industrial production to start the year.

The data releases combine the two months of January and February as is the Chinese statistics bureau custom to avoid distortions from the Lunar New Year holiday, which can fall in either month depending on the year.

Retail sales grew by 6.7% year-on-year, topping expectations of analysts polled by Reuters for growth of 3% from a year ago. Fixed asset investment rose by 12.2%, well above the forecast for a 5% increase. Industrial production was up by 7.5% versus expectations of 3.9% growth.

Big miners led the ASX 200 lower from the start of trade and energy sector stocks fell, BHP -4.2%, Fortescue Metals Group -4.7%, Newcrest -2.8%, Evolution Mining -2% and Santos -3.4% and Woodside -2.9%.

Rio Tinto announced a move to privatise Toronto-listed Turquoise Hill and take full control of the Oyu Tolgoi copper mine in Mongolia. Analysts appear to see the $US2.7bn bid as a good deal for Rio Tinto, significantly increasing copper in the group’s production mix, and ensuring a cleaner structure at Oyu Tolgoi. Shares closed almost 4% lower.

The US Federal Reserve meets this week and is on track to raise interest rates for the first time since 2018. Tight labour markets, supply disruptions, rising inflation and Russia’s invasion of Ukraine is clouding the economic outlook.

Covid-related lockdowns in some of China’s manufacturing cities hit oil prices with an expectation of lower demand. Hopes for positive talks between diplomats for a ceasefire in Russia’s war with Ukraine added pressure that took crude back toward US$100 a barrel. WTI has dropped to US$98 a barrel.

AUD/USD US71.82c

Bitcoin is US$38,706.

Gold is US$1934 an ounce.

Brent crude oil is around US$103 a barrel.

WTI crude oil is at US$98 a barrel.


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