China Industrial Output Shrinks

China industrial production rose 6.0 percent from a year earlier in July of 2016, compared to a 6.2 percent rise in June and slightly below market forecasts of a 6.1 percent growth. By categories, electricity, gas and water production and water supply grew by 7.4 percent, followed by manufacturing (+7.0 percent). In contrast, the mining sector fell 3.1 percent. Meanwhile, fixed-asset investment expanded 8.1 percent in January to July 2016, compared to 9.0 percent in the first six months of 2016 and market expectations of an 8.8 percent rise. Investment by private firms rose 2.1 percent year-on-year, slowing from a 2.8 percent growth in January to June 2016.

Julian Evans-Pritchard, China economist at Capital Economics, said the slowing investment growth was of more concern than industrial production.

"In the long-run, it's pretty concerning to us. The private [investors] are pretty downbeat on prospects," Evans-Pritchard said, noting that state borrowers may be crowding private investors out of affordable credit.

"Policy makers will have to do more if they want to reverse this trend," he added, noting that he expects more fiscal easing as the impact of previous rounds of monetary easing appeared a "bit underwhelming."

Market Snapshot



Equity Markets: Top performer: India. Worst performer: Australia Opening wrap:  MSCI's broadest index of Asia-Pacific stocks outside Japan nudged up 0.2 percent. It was on track to gain 1.9 percent for the week. Both China's CSI300 index and the Shanghai Composite rose about 0.5 percent. Hong Kong stocks rose 0.7 percent, while Australian stocks gained 0.3 percent. Japan's Nikkei was up 0.7 percent at 16,856.27 at the end of morning trade. The broader Topix was up 0.3 percent at 1,319.03, while the JPX-Nikkei Index 400 also rose 0.3 percent to 11,873.41.

Currency Markets : Top performer: CAD/AUD. Worst performer: NZD/CAD. Opening wrap:  Against the yen, the dollar edged up 0.1 percent to 102.04 yen, having pulled up from this week's low near 101 yen. The euro held steady at $1.1140 after retreating from Thursday's high of $1.1192. Sterling edged up 0.2 percent to $1.2976, but was down 0.7 percent for the week. The euro last fetched 85.86 pence. The dollar's index against a basket of six major currencies edged up 0.1 percent to 95.903, having pulled up from this week's low of 95.442 touched on Wednesday.

Commodities Markets: Top performer: Crude Oil WTI. Worst performer: Oats. Opening wrap: International Brent crude oil futures were trading at $46.20 per barrel, up 0.35 percent, from their last close and not far off their $46.30 monthly high reached in the previous session. U.S. WTI crude futures were at $43.71 a barrel, up 0.51 percent, from their last close. Spot gold fell to $1,337.16 an ounce. Platinum was up 0.4 percent at $1,141.45 an ounce, while palladium remained stable at $688.97. Spot silver edged 0.3 percent down at $19.88 an ounce.