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Home / Business / Inventories are rising as car fares are to be delayed

Inventories are rising as car fares are to be delayed



Equities gave early losses early on Wednesday after it was reported that the Trump government plans to postpone car fares by up to six months.

The S & P 500 (^ GSPC) rose 0.21% or 5.88 points from 11:15 ET. The Dow (^ DJI) rose 0.09% or 21.81 points, while the Nasdaq (^ IXIC) gained 0.57% or 43.97 points.

On Wednesday, several news agencies reported that the Trump administration plans an interruption to the implementation of car tariffs before May 18. The Ministry of Commerce issued a report earlier this year stating that Trump could justify the imposition of customs duties of up to 25% on cars, citing a national security threat.

The news brought stocks into the green after Dow had been put off by the ace 190 points earlier in the session.

US Stock markets initially opened lower as new retail and industrial production data in April came in below expectations.

Retail sales in the US declined by 0.2% in April, as consensus economists had expected a plus of 0.2%. In the control group, which excludes volatile car and gas sales, retail sales decreased 0.2% month-on-month. However, for the month before, this control group was revised up to 1.1%, an annual growth rate of 3.2% from the previous month of 3 months and a five-month high.

JP Morgan analysts noted that lower reimbursements during this year's tax season may have contributed to weakness in household spending in April.

"Whatever caused last month's disappointment, the overall consumer environment remains quite favorable (employment , Sentiment, etc.), so we'd expect consistently better numbers for the rest of the second quarter, "JP Morgan analyst Michael Feroli said in a statement on Wednesday.

industrial production also fell unexpectedly in April, 0.5% to consensus expectations dropped without change. Production output, which accounts for around three-quarters of total production, declined by 0.5%. In the first three months of the year manufacturing output dropped by an average of 0.4% per month.

"Subdued global growth continues to weigh on US producers as the dollar continues to appreciate in recent months," wrote Andrew Hunter, chief US economist for capital economics, in a note.

Manufacturing accounts for only a small portion of US economic activity, but is closely monitored as a proxy for global change demand.

China

China also reported weak retail sales and manufacturing data for April, fueling fears of a slowdown in the world's second-largest economy in the face of an escalating trade war with the US.

Retail sales increased 7.2%. China had the weakest pace of growth since 2003, below the year-on-year growth rate of 8.6%.

China's industrial output rose 5.4% yoy in April, but also failed to meet expectations. The disappointing new data from the main manufacturing sector in the country reversed the obvious upturn seen in March, when industrial production growth reached a four-and-a-half-year high of 8.5%.

These results come from the Chinese government Earlier this year, an economic stimulus program aimed at lowering corporate taxes and fees in an effort to shore up the economy.

Many analysts saw weak economic growth in China as a signal that the US may have more leverage over negotiating a trade agreement As the domestic economy continues to show resilience based on recent GDP and labor market data.

In the meantime, Trump is expected to sign an enforcement order prohibiting US companies from using telecommunications equipment manufactured by companies that are nationally known to be security risks – a move that, according to a Reuters report, is in the business of the Chinese technology giant Huawei would block.

Such action would likely lead to tensions between the US and China as Huawei focuses on China's goal of expanding the ranks to become a leader in global technology. The US has claimed that Huawei's equipment can be used by the Chinese state for espionage, but the company has repeatedly rejected these allegations.

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