Chinese stocks have been whipsawing amid economic data flowing out of the world’s second-largest economy, putting divided estimates for a weekend release on inflation in the spotlight for
Alibaba
and other names.
Expect
Alibaba
(ticker: BABA),
JD.com
(JD),
NIO
(
NIO
), and other widely held Chinese names to move on Monday on the back of the release Saturday of China’s consumer-price index (CPI) for August. These stocks have been rising and falling—but mostly falling—amid data showing weakness in the Chinese economy and with there being little good news to smile about in recent weeks.
Continued signs of a slowdown in China make economic data key catalysts for stocks exposed to the Chinese consumer, like e-commerce companies and car manufacturers. But Saturday’s release is so symbolic that it could also move the
Dow Jones Industrial Average
and
S&P 500,
which have been rattled at times in recent months as Chinese economic fears have gripped global markets.
“Attention will be squarely focused on China’s latest inflation numbers which are again expected to reflect the unwillingness of the Chinese consumer to spend due to sagging confidence levels,” said Tim Waterer, an analyst at broker KCM Trade.
Data released in August showed the largest economy in Asia slipped into deflation in July for the first time since the Covid-slammed days of early 2021, a grim sign of weakness. Saturday sees the latest print for August—and it could usher in volatility because economists’ expectations are on a knife’s edge.
Economists expect that Chinese CPI fell 0.05% annually in August, a continued trend of deflation but moderating from July’s 0.3% decline. But that expected figure is a consensus derived from a survey, meaning that economists are likely split between estimates of China moving back into inflation or remaining in deflation. The difference is a hugely impactful narrative for markets.
Also in focus will be the Chinese producer-price index (PPI) for August, expected to show factory gate prices falling 3.7% annually last month, though moderating from July’s 4.4% slide.
“If the Chinese CPI and PPI data reinforces the deflationary story, this could present a hurdle for risk assets heading into next week,” Waterer said.
Write to Jack Denton at [email protected]
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