Chinese stocks show growth ahead of the holiday week

On Tuesday, trading on the US stock market closed with mixed performance. The Dow Jones Index (US30) gained 0.10%. The S&P 500 (US500) declined by 0.33%. The tech-heavy Nasdaq (US100) closed lower by 0.59%. The market was pressured by weak US retail sales data for December (0% against projections of +0.4%), which intensified concerns regarding consumer demand and supported expectations of more than two Fed rate cuts this year. Bond yields decreased across the curve. A positive outlier was Spotify, whose shares soared 14.8% due to strong earnings and audience growth.

Stock markets in Europe mostly declined yesterday. The German DAX (DE40) fell by 0.11%, the French CAC 40 (FR40) closed up 0.06%, the Spanish IBEX 35 (ES35) dropped 0.40%, and the British FTSE 100 (UK100) closed down 0.31%. Investors remained cautious ahead of key US employment and inflation data, which may clarify the Fed’s next steps. The focus also remained on the corporate earnings season.

On Wednesday, silver (XAG) rose nearly 2% to $82 per ounce, recovering previous session losses amid weak US data and declining confidence in American assets. Retail sales in December unexpectedly slowed, fueling fears for consumer demand. Attention is now focused on the jobs report; weak data could further support precious metals. Markets are already pricing in about 60 bps of Fed rate cuts by the end of the year. Additional demand for safe-haven assets is linked to outflows from dollar instruments amid political uncertainty in the US. However, market participants remain cautious due to recent high volatility and sharp fluctuations in metal prices.

The US natural gas prices (XNG) rose to $3.17 per MMBtu, snapping a two-day decline amid near-record LNG exports. Deliveries to the eight largest terminals in February reached 18.5 billion cubic feet per day, limiting domestic supply. Previously, Arctic cold led to a record reduction in inventories, which are currently about 1% below normal.

Asian markets grew confidently on Tuesday. The Japanese Nikkei 225 (JP225) jumped 2.28%, the FTSE China A50 (CHA50) rose by 0.02%, the Hong Kong Hang Seng (HK50) gained 0.58%, while the Australian ASX 200 (AU200) showed a negative result of 0.03%.

Chinese stocks ended the session higher amid expectations of high consumer demand during the Lunar New Year period. Additional optimism was sparked by reports of a possible meeting between Donald Trump and Xi Jinping in April. On Wednesday, the offshore yuan held around 6.91 per dollar, near highs since April 2023, amid steady daily fixing by the PBoC. The Central Bank set the midpoint rate at 6.9438, signaling a desire for stable and moderate currency appreciation despite softer policy rhetoric. However, the yuan’s rise is capped by the confirmation of a “moderately easy” monetary policy stance. January inflation slowed to 0.2% YoY from 0.8%, while producer price deflation narrowed to 1.4% thanks to stabilizing commodity prices and measures to limit excessive competition.

The Reserve Bank of Australia (RBA) stated its readiness for further measures to curb inflation, which, according to RBA Deputy Governor Andrew Hauser, remains “too high.” The regulator intends to “do whatever is necessary” to return inflation to the 2-3% target range. Last week, the RBA raised the rate by 25 bps, reversing a previous cut after inflation again exceeded projections. Both headline and core inflation remain above the target, and a return to the target level is not expected until mid-2027.