Category: Production

China’s retail sales are expected to recover after the lifting of coronavirus restrictions but the recovery in consumption is likely to be volatile and more difficult than those in many other major economies, Fitch Ratings said Thursday.

Some of the major reasons behind this are a weak employment and income outlook, declining home prices, rising household leverage, and a lack of direct stimulus, the global rating agency said in a statement.

“The surge in infections in China is reflected in the 1.8% year-on-year contraction in retail sales in December 2022, which led to a 0.2% decline for the full year,” it said.

The agency, however, said it expects strong growth in retail sales of essential goods such as food and beverages, adding apparel and cosmetics products, which saw sluggish demand last year due to mobility restrictions, are likely to see stronger growth as demand returns.

It said a slowdown in the housing sector has undermined Chinese consumers’ wealth, which accounted for around 59% of their urban household assets in 2019, and noted that “rising household indebtedness has also impaired Chinese consumers’ purchasing power.”

Source: Anadolu Agency

Retail sales volumes in the UK unexpectedly shrank by 1% on a monthly basis in December 2022, according to official data released on Friday.

The market forecast was a 0.5% hike for the month, following a downwardly revised 0.5% decrease in November.

Compared to the pre-pandemic level in February 2020, total retail sales were 13.6% higher in value terms, but volumes were 1.7% lower, the Office for National Statistics (ONS) said.

On an annual basis, retail sales volumes fell 5.8% in December.

For all of 2022, retail sales volumes narrowed by 3.0% “as the lifting of restrictions on hospitality led to a return to eating out, and rising prices and the cost of living affected sales volumes,” the ONS said.

Source: Anadolu Agency

With midweek, sales dominated global stock markets amid growing expectations of a recession.

On Wednesday, US producer inflation saw its biggest decline since April 2020 with 0.5% on a monthly basis in December.

Despite the positive inflation data, hawkish statements by Fed officials saying that the final interest rate should be above 5% and weak macroeconomic data strengthened recession forecasts in the stock markets, bringing the negative course.

St. Louis Fed President James Bullard said it is necessary to act as quickly as possible to reach 5% in the benchmark policy rate.

Cleveland Fed President Loretta Mester also said interest rates should rise slightly above the 5.25-5.50% range which was targeted for the end of the year.

On the other hand, retail sales in the US fell 1.1% in December, below expectations, and industrial production fell 0.7%, the biggest drop since September 2021

The Fed’s Beige Book report on the US economy said US companies expect “low growth” in the economy in the coming months.

Following these developments, markets overwhelmingly expect that the Fed will increase interest rates by 25 basis points at its Feb. 1 meeting, with a 96.4% possibility.

The bank is expected to hike interest rates by 25 basis points in March and May, and not to make any changes in June.

With these developments, a sales-weighted course was followed in the New York stock market on Wednesday.

The Dow Jones index dropped 1.81%, the S&P 500 index 1.57%, and the Nasdaq 1.24%.

The dollar index rebounded on Wednesday after hitting 101.5, its lowest level since May 31, 2022, and is trading at 102.3 on Thursday.

The US 10-year bond yield fell from 3.56% to 3.32%, its lowest level in four months.

The US index futures contracts started the day down.

The barrel price of Brent oil retreated from its highest level in one-and-a-half months, falling 4.5% from $88 to $84.1, while the price per pound of copper lost 2.2%.

On the European side, the CPI announced in the UK on Wednesday remained in double digits, although it continued to slow down, gaining 10.5% annually in December.

The euro area’s annual inflation rate was also at 9.2% in December, according to official figures on Wednesday.

Asian side

Rumbles of a recession put the spotlight on the ECB President Christine Lagarde’s speech at a Davos panel on Thursday.

While a mixed course was observed in European stock markets on Wednesday, the DAX 40 index dropped 0.03% in Germany and the FTSE 100 0.26% in the UK, while the CAC 40 in France inched up 0.09%.

The euro/dollar pair stabilized just below 1.08 after testing 1.0890, the highest level since April 21, 2021.

On the Asian side, exports rose 11.5% and imports 20.6% year-on-year in December, according to data released today in Japan.

With these new figures, Japan’s trade deficit in 2022 stood at a record level of 19.97 trillion yen ($155.3 billion).

Japan’s Nikkei 225 lost 1.5% and India’s Sensex dropped 0.3%, while China’s Shanghai composite index gained 0.2% and South Korea’s Kospi climbed 0.3%.

In Türkiye, the BIST 100 index, which was on an upward trend on Wednesday, ended the day at 5,384.17 points, up 1.30%.

On Thursday, the Turkish Central Bank is set to release its latest interest rate decision.

Source: Anadolu Agency

Oil prices decreased on Thursday influenced by weak economic data from the US amid recession fears and a hefty rise in crude stockpiles.

International benchmark Brent crude traded at $83.92 per barrel at 9.20 a.m. local time (0620GMT), down 1.25% from the closing price of $84.98 a barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $78.63 per barrel at the same time, a 1.47% fall after the previous session closed at $79.8 a barrel.

Oil prices retreated from their highest level in over a month after weak US data fueled recession worries.

US Producer Price Index recorded its biggest decline since April 2020 in December, with a 0.5% fall, according to data released Wednesday.

Retail sales in the US fell 1.1% in December, below expectations, while industrial production fell 0.7%, the biggest drop since September 2021. Additionally, the US Fed reported that American companies expect “low growth” in the economy in the coming months.

Meanwhile, US crude oil inventories rose by about 7.6 million barrels during the week ended Jan. 13, data from the American Petroleum Institute showed.

A more-than-expected stockpile increase signals a drop in crude demand, weighing prices down.

Official stock data from the US Energy Information Administration is scheduled to release later in the day, and if the estimated build-in stock levels is confirmed, prices are expected to fall further.

Source: Anadolu Agency

Türkiye’s benchmark stock index opened at 5,371.28 points on Thursday, down 0.24% or 12.89 points from the previous close.

On Wednesday, Borsa Istanbul’s BIST 100 index rose by 1.3% to close the day at 5,384.17, with a daily trading volume of 124.12 billion Turkish liras ($6.6 billion).

The US dollar/Turkish lira exchange rate was at 18.7955 as of 10.00 a.m. local time (0700GMT), the euro/lira exchange rate stood at 20.2820, while a British pound traded for 23.1625 Turkish liras.

Brent crude oil was selling for around $84.38 per barrel, while the price of an ounce of gold was $1,909.95.

Source: Anadolu Agency

Oil prices increased on Wednesday over bullish demand expectations in the world’s second largest economy, China, as a result of the loosening of its “zero-Covid” policy.

International benchmark Brent crude traded at $86.68 per barrel at 09.57 a.m. local time (0657GMT), up 0.88% from the closing price of $85.92 a barrel in the previous trading session.

The American benchmark West Texas Intermediate (WTI) traded at $81.34 per barrel at the same time, a 1.11% gain after the previous session closed at $80.45 a barrel.

The Chinese economy grew 3% year-on-year in 2022, better than the market forecast, but missed the official target of around 5.5%, the National Bureau of Statistics figures showed on Tuesday.

However, the country’s latest move to remove coronavirus restrictions boosted market sentiments for bullish oil demand over the rest of the year.

Meanwhile, the Organization of Petroleum Exporting Countries (OPEC) kept global oil demand growth unchanged for 2023 in its most recent monthly oil market report published Tuesday.

Oil demand is projected to grow by 2.2 million barrels per day (bpd) in 2023 to reach 101.8 million bpd with some minor upward adjustments due to the expected better performance in China’s economy on the back of its reopening from COVID-19 restrictions.

Other regions are expected to see slight declines due to economic challenges that are likely to weigh on oil demand.

On the supply side, President Vladimir Putin said on Tuesday that Russia increased its oil production by 2% to 535 million tons in 2022. Gas output dropped 11.8% but due to high prices, exporters ended the year with profits, the Russian leader said at a government meeting in Moscow.

“Budget revenues increased 10% last year to 27.8 trillion rubles ($404.7 billion),” he added.

Source: Anadolu Agency

Passenger car registrations in the EU shrank 4.6% year-on-year in 2022 due to component shortage in the first half of the year, an industry group said on Wednesday.

Registrations of new passenger cars amounted to 9.3 million units last year, lowest since 1993, the European Automobile Manufacturers’ Association (ACEA) said in a statement.

Among the EU’s four largest markets, Germany was the sole country posting a growth, 1.1%, in 2022. Italy saw the steepest decline (down 9.7%), followed by France (down 7.8%) and Spain (down 5.4%).

In December, new car registrations surged 12.8% from a year ago to 896,967 units.

“The German and Italian car markets had an extremely strong end to 2022, posting double-digit increases of 38.1% and 21.0%, respectively,” the association said, adding the Spanish car market narrowed by 14.1%, whereas France remained stable (down 0.1%) during the same period.

Source: Anadolu Agency

The Organization of Petroleum Exporting Countries (OPEC) kept global oil demand growth unchanged for 2023.

According to OPEC’s most recent monthly oil market report published Tuesday, oil demand will grow by 2.2 million barrels per day (bpd) in 2023 to reach 101.8 million bpd with some minor upward adjustments due to the expected better performance in China’s economy on the back of its reopening from COVID-19 restrictions. Other regions are expected to see slight declines due to economic challenges that are likely to weigh on oil demand.

The growth in OECD is projected at 330,000 bpd to reach 46.52 million bpd, while growth in the non-OECD is expected to climb from 1.89 million bpd to 55.25 million bpd.

Global oil supply increases in December

In December, the global oil supply increased by around 300,000 bpd month on month, averaging 101.7 million bpd. This figure is 3.8 million bpd higher than the previous year.

OPEC’s crude oil production averaged 28.97 million bpd in December, a month-on-month increase of about 91,000 bpd. During this period, crude oil production in OPEC increased the most in Nigeria, Angola, Libya and Venezuela, while production in Kuwait, Congo and Algeria declined.

The share of OPEC crude oil out of total global production increased by 0.1 percentage points to 28.5% in December compared to the previous month.

Source: Anadolu Agency