China's massive workforce is shrinking, spelling trouble for the world's second largest economy. With fewer young people entering the labour force and the growing "Bai Lan" (Let it rot) movement, China desperately needs a productivity boost to keep growth on track. While domestic travel has bounced back, people aren't splashing as much cash as before. Making matters worse, the latest trade figures show exports and imports tumbling yet again as demand dries up both at home and abroad. With the economy under pressure, all eyes turn to major Chinese companies like Alibaba, whose upcoming earnings could reveal whether storm clouds are gathering or blue skies are ahead.
Stocks rose Monday as investors snapped up shares of Berkshire Hathaway and Amazon ahead of big inflation data. Berkshire surged over 3% after posting record quarterly profits, while Amazon extended its 10% rally since issuing an upbeat Q3 outlook last week, in contrast with Apple, which fell 6.6% since. With inflation data out later this week, Monday's gains suggest the Fed's rate hikes are slowing prices without crushing the economy.
Gold drifted lower Tuesday as a sturdier dollar and rising Treasury yields tarnished its appeal, with the market betting on further Fed rate hikes to tame sticky inflation. Analysts warn that more bond buying triggered by hot inflation data could hammer gold prices in the near term.
Oil prices climbed Tuesday as Saudi and Russian supply cuts buoyed the market, though demand worries kept gains in check. Saudi vowed to continue slicing output by 1 million barrels daily in September, while Russia too will trim exports, propping up prices despite OPEC's unchanged policy as economic headwinds loom. The price, however, is at a major resistance level and is expecting a mild pullback.
The U.S. dollar treaded water ahead of inflation data, while the yuan held steady before China's anticipated dismal July trade figures. The Aussie and Kiwi, barometers of the yuan's strength, edged down against the greenback along with the yen, while the euro dipped on dreary German factory output. Fed officials signal further rate hikes may be needed to curb inflation to 2%.