Critical Data from the US and China: Key Market Sentiments for Next Week
Global market participants will enter a relatively short week that is nonetheless packed with important agenda items from the two largest world economies: China and the United States. Investors will monitor the release of China’s economic activity data at the start of the week as well as the US Federal Reserve’s interest rate decision scheduled for mid-week.
This series of data releases is attracting attention because it provides insight into the strength of China’s economic recovery whilst also indicating the direction of US monetary policy. The combination of these two factors frequently determines sentiment for movements in global stock markets, exchange rates, and commodity prices.
Financial market movements in the coming week have the potential to be influenced by the realisation of these indicators, particularly in determining investor expectations regarding global economic growth and the direction of US interest rates.
China’s Industrial Activity
The global economic agenda will commence on Monday with the release of China’s industrial production data for the January-February period. Market consensus estimates that China’s industrial production will grow approximately 5.0% year-on-year.
Previously, according to the National Bureau of Statistics cited by Trading Economics, China’s industrial production in December 2025 grew 5.2% year-on-year, higher than the 4.8% increase in the previous month and exceeding market expectations which were in the region of 5.0%.
This increase marked the fastest growth rate since September and was primarily driven by strengthening activity in the manufacturing sector, which grew 5.7%, rising from 4.6% in November. The Chinese government has indeed been pushing policy measures in recent months to strengthen domestic demand to support economic growth.
In addition to manufacturing, mining sector production also continued to show expansion of 5.4%, although it slowed slightly compared to 6.3% in the previous month. Meanwhile, electricity, heat, gas and water production grew 0.8%.
More specifically, of the 41 major industrial sectors, 33 sectors recorded growth. Several sectors with the strongest increases include the computer and communications equipment industry which surged 11.8%, the railway and shipbuilding industry at 9.2%, automotive at 8.3%, and chemical products at 8.0%.
Throughout 2025, China’s overall industrial production recorded growth of 5.9%, whilst on a monthly basis industrial output increased by 0.49%.
China’s Domestic Consumption
In addition to industrial activity, investors will also monitor China’s retail sales data, which is an important indicator of the state of domestic consumption.
According to the National Bureau of Statistics cited by Trading Economics, China’s retail sales in December 2025 grew only 0.9% year-on-year. This figure represents a slowdown compared to the 1.3% increase in the previous month and fell below market expectations which anticipated growth of 1.2%.
This growth marks the weakest performance since December 2022, reflecting pressure on household consumption which continues to be affected by relatively weak labour market conditions and a decline in property prices.
By sector, the growth in sales of food and basic necessities slowed to 3.9% from the previous 6.1%. Clothing and textile sales also slowed to 0.6% compared to 3.5% in the previous month.
Sales of traditional and modern pharmaceuticals recorded growth of 1.2%, down from 4.9%, whilst sales of cultural and office supplies increased 9.2%, although lower compared to 11.7% in November.
On the other hand, sales of petroleum products and derivatives contracted by 11%, a sharper decline compared to the 8% decrease in the previous month. Several other sectors such as automobiles, household appliances, and tobacco and alcohol products also continued to record declines, albeit at more moderate contraction rates.
On a monthly basis, China’s retail sales fell 0.12%, although this decline was smaller compared to the 0.41% contraction in the previous month.
US Producer Price Pressure
From the United States, market participants will monitor the release of the Producer Price Index (PPI) data for February scheduled for Wednesday.
According to the Bureau of Labor Statistics cited by Trading Economics, producer prices in the United States previously rose 0.5% on a monthly basis in January 2026. This figure was higher compared to the 0.4% increase in the previous month and exceeded market expectations of 0.3%.
This increase was primarily driven by a surge in prices in the services sector which rose 0.8%, marking the largest increase since July. One of the main drivers came from the margin increase in the professional and commercial equipment trading sector which surged 14.4%.
Prices also increased in several other categories such as clothing and footwear, chemical products, cable telecommunications services, and health and beauty retail sector.
Conversely, goods prices actually fell 0.3%, the largest decline since March 2025. This decline was primarily driven by a plunge in petrol prices of 5.5%. In addition, chicken egg prices, electricity, natural gas fuel, fresh fruit and ethanol also experienced declines.
On a year-on-year basis, producer prices in the United States recorded an increase of 2.9%. Meanwhile, core producer inflation increased 0.8% on a monthly basis, far above market expectations of 0.3%.
The Federal Reserve’s Interest Rate Decision
The main focus of market attention next week will be directed towards the Federal Reserve’s monetary policy decision scheduled for Thursday morning in Indonesian time.
According to the Federal Reserve cited by Trading Economics, the US central bank previously maintained interest rates in the target range of 3.5% to 3.75% in its January 2026 meeting. This decision was in line with market expectations following the Federal Reserve’s three interest rate cuts throughout last year.
Minutes from the Federal Open Market Committee (FOMC) meeting indicated