Global equities continued to decline in past week, primarily due to the weakened investor sentiment and fears on economic slowdown in China. While the reported macroeconomic data from Europe matched analyst expectations, the US surprised the market with higher than expected growth in retail sales. In July, the retail sales grew by 0.7% m/m (vs 0.4% forecast and up from June’s 0.2%). Importantly, online sales were the major contributor, growing by 1.9% m/m. Similarly, industrial production also delivered a positive surprise, growing by 1.0% m/m (vs 0.3% forecast and up from June’s -0.8%).
The US economy has proven much more resilient in 1H23 than most have anticipated. While most analysts foresaw recession, consumer demand as well as supply-side of the economy has remained strong. In fact, the Atlanta Fed GDPNow models now forecasts that the US economy will grow by 5.8% seasonally-adjusted annual rate in 2Q23. This would mark the fifth consecutive quarterly above-trend growth, reads the Global Equity Markets report of Galt & Taggart.
