Both China and the U.S. reported weaker retails sales and industrial production for April, even before the latest escalation of the trade war.
The softer Chinese data cast doubt on what many had hoped were signs of recovery in the world's second biggest economy in March.
"The real message today is that both the economic data from the U.S. and China have disappointed. They're like two boys in the sand box that are spitting on each other, and it could get a lot worse," said Marc Chandler, global market strategist at Bannockburn Global Forex. Trump also threatened 25% tariffs on another $325 billion in Chinese goods, which economists say could hit Chinese sales and send prices higher for U.S. consumers. The impact of those tariffs would be even greater on GDP.the slowest pace in 16 years and less than March's 8.7% and forecasts of 8.6%. China's April industrial production rose 5.4%, less than the 6.5% expected or the 8.5% gain in March.
U.S. industrial production, reflecting total production at factories, utilities and mines, fell 0.5% after a 0.2% gain in March. Manufacturing output dropped 0.5%, led by a 2.6% decline in motor vehicles and parts, the third decrease in four months and the latest manufacturing report to show softness."Autos had a weird swing, as a result of excess inventories. I'll be paying pretty close attention to manufacturing data, the survey datas, the confidence measures.
Markets responded to the news from both countries by ramping up expectations for central bank and other policy easing. U.S. fed funds futures signaled expectations for more than one quarter point rate cut this year, while China's stock markets rallied on expectations of more fiscal and monetary stimulus.
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