WORLDWIDE: HEADLINES 

Australian Retailers Get Holiday Boost, But Headwinds Strengthen

Australian retail sales climbed to record highs in April as consumers spent big for the holidays, though surging inflation and rising interest rates are steadily sapping spending power. 

Data from the Australian Bureau of Statistics on Friday showed retail sales rose 0.9% in April to a record A$33.9 billion ($24.11 billion), matching analysts’ forecasts. 

Sales were up a heady 9.6% on a year earlier, though a chunk of that was due to rising prices. 

“High food prices have combined with increased household spending over the April holiday period as more people are travelling, dining out and holding family gatherings,” said the bureau’s director of quarterly economy-wide statistics, Ben James. 

Policy makers are hoping households will dip into savings to keep consuming even as real incomes go backwards. 

Australians built up around A$272 billion worth of extra savings during the pandemic and are sitting on bank deposits alone worth a record A$1.26 trillion. 

This is one reason the Reserve Bank of Australia (RBA) felt confident enough to raise interest rates by a quarter percentage point to 0.35% this month in the first hike since 2010 and to flag more increases ahead. 

Full coverage: REUTERS 

China’s Industrial Profit Falls Sharply In April Amid COVID Curbs 

Profits at China’s industrial firms fell at their fastest pace in two years in April as high raw material prices and supply chain chaos caused by COVID-19 curbs squeezed margins and disrupted factory activity. 

Profit shrank 8.5% from a year earlier, the statistics bureau said on Friday, swinging from a 12.2% gain in March according to Reuters’ calculations based on official data. The slump is the biggest since March 2020. 

The industrial sector has been hit hard by the stringent and widespread anti-virus measures that have shut factories and clogged highways and ports. 

Industrial output from the commercial hub of Shanghai, located at the heart of manufacturing in the Yangtze River Delta, nosedived 61.5% in April, amid a full lockdown and much steeper than the 2.9% drop nationally. 

Industrial firms’ profits grew 3.5% year-on-year to 2.66 trillion yuan ($395.01 billion) for the January-April period, slowing from an 8.5% increase in the first three months, the statistics bureau said. 

The world’s second-largest economy saw very weak activity growth last month as exports lost momentum and the property sector wobbled. 

Full coverage: REUTERS 

WORLDWIDE: FINANCE/BUSINESS 

Asia Shares Join Global Rebound As Fed Hike Fears Ease, China Tech Boost  

Asian shares extended overnight global gains thanks to strong results from regional tech firms and U.S. retailers, while investors also took comfort from Federal Reserve minutes showing a pause to its rate hikes is on the cards later this year. 

The swing in sentiment left the dollar wallowing at one-month lows, with the euro rising to its highest since April 25. 

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 1.5% in early trading, the biggest gain in a week, buoyed by a 1.2% rebound in resources-heavy Australian shares, a 2.8% jump in Hong Kong stocks (.HSI) and a 0.7% rise for blue chips in mainland China (.CSI300). 

Japan’s Nikkei (.N225) advanced 1.0%. 

The Hang Seng tech index (.HSTECH) opened 4.5% higher, as first quarter revenues from tech giant Alibaba (9988.HK) and Baidu (9888.HK) beat forecasts. 

The United States will not block China from growing its economy, but wants it to adhere to international rules, Secretary of State Antony Blinken said on Thursday in remarks that didn’t come as a surprise to investors and political analysts. 

Wall Street closed sharply higher overnight after optimistic retail earnings outlooks and waning concerns about overly aggressive interest rate hikes by the Fed encouraged buyers. 

Full coverage: REUTERS 

Dollar Sinks To One-month Low Amid Easing Fed Rate Hike Bets

The U.S. dollar sank to a one-month low versus major peers on Friday as traders lowered Federal Reserve rate hike expectations amid signs the central bank might slow or even pause its tightening cycle in the second half of the year. 

The dollar index, which measures the greenback against a basket of six major peers, fell as low as 101.43 for the first time since April 25. A rally in Asian stocks also sapped demand for the greenback as a haven. 

Against the euro, the U.S. currency also slipped to the weakest since April 25 at $1.0765, and dropped to the lowest against sterling since April 26 at $1.2607. 

The risk-sensitive Australian dollar rallied 0.51% to $0.7136, while the New Zealand dollar jumped 0.49% to $0.6510. 

The dollar index is headed for a 1.5% drop this week, following last week’s 1.37% slide. That would be the first two-week decline since the turn of the year. 

It reached a nearly two-decade peak above 105 mid-month, but retreated amid signs that Fed tightening may already be slowing economic growth. Treasury yields have also dropped from multi-year highs, further undermining the dollar. 

The dollar weakened 0.3% to 126.69 yen, sliding gradually over the past three weeks from a two-decade high of 131.35. 

Full coverage: REUTERS  

Oil Lingers Near 2-month High Amid Global Supply Concerns 

Oil prices hovered around a two-month high on Friday, with Brent crude on track for its biggest weekly jump in 1-1/2 months, supported by the prospect of an EU ban on Russian oil and the coming summer driving season in the United States. 

Brent crude futures for July dipped 9 cents to $117.31 a barrel at 0247 GMT after rising to as high as $118.17 earlier in the session. The benchmark was on track for a gain of about 4% this week. 

U.S. West Texas Intermediate (WTI) crude futures were down 18 cents, or 0.2%, at $113.91 a barrel. WTI is set for a weekly gain of about 0.7%. 

“Momentum is flat-out bullish, with many factors pointing to a tighter market, even more so with the EU on the precipice of a total ban on Russian energy,” said Stephen Innes, managing partner at SPI Asset Management. 

“Ahead of peak U.S. driving season, refined products remain in alarmingly short supply in the West, which should keep a high floor on oil prices through the summer.” 

Full coverage: REUTERS