SHANGHAI (Reuters) – Asian shares inched up on Tuesday as traders awaited U.S. retail sales data and more corporate earnings to gauge the health of the world’s biggest economy, with markets remaining focused on a likely U.S. rate cut by the end of the month.
Investors were relieved by encouraging Chinese economic data on the previous day, though broad pressure across global business and investment from Sino-U.S. trade frictions and slowing world growth reinforced expectations of policy easing by major central banks.
US - Data - Tuesday - Sales - %
U.S. data on Tuesday is expected to show that retail sales gained 0.1% in June, according to the median estimate of economists polled by Reuters. But a decline in net interest margin reported by Citigroup in its mixed quarterly report underlined risks for financial firms in a lower interest rate environment.
That decline partly overshadowed better-than-expected profit numbers, triggering a fall in shares of other banks on concerns that it would presage lower profits across the industry.
Risk - Rally - Earnings - Season - Ryan
“Clearly the biggest risk to the most recent rally is the earnings season,” said Ryan Felsman, senior economist at CommSec in Sydney.
Signs of trade tensions weighing on corporate profits and the fading impact of tax cuts would underscore the U.S. Federal Reserve’s concerns over slowing business investment, he said.
Concerns - Economy - Slowing - US - Economy
“That feeds into the narrative of concerns around the global economy, the slowing in the U.S. economy, but also the need for potentially more aggressive rate cuts from the Fed to support the U.S. economy going forward,” Felsman said.
Markets are fully priced for a 25-basis point cut by the Fed at its meeting at the end of this month.
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