China economic data showed further slowdown, US inflation increased only incrementally

Asian stocks fell today as weaker-than-expected Chinese economic data have been released. Factory growth has further slowed down in August, and retail sales hit the one-year low as sporadic COVID cases appeared across provinces. China’s current COVID measures remain extremely strict and have aroused global concerns because the measures may disrupt economic growth. Analysts are expecting more support from Beijing, including a potential cut in the bank’s reserve requirement ratio. Some analysts expect that there will be a 0.5 percentage point cut in October.

Overnight, the US released its fresh inflation data in August. The gains were the smallest in the past 6 months, suggesting that Powell’s comment was correct. Powell has been repeatedly stating that inflation will only be transitory. Compared with a year ago, core inflation only rose by 4%. Compared with a month ago, it rose only by 0.1%. The DXY Index remains largely unchanged after the data.