Wall Street threatened to melt down overnight as markets hit the panic button over a potential 1.0% Fed rate hike at the end of this month, and soft earnings from JP Morgan and Morgan Stanley raised recession fears. Soothing comments on the former by two Fed officials allowed very skittish equity markets to rally later in the session, with Wall Street making back much of its losses. The S&P 500 fell by 0.30%, while the Nasdaq managed to close in positive territory, rising 0.03%. Meanwhile, the Dow Jones closed 0.46% lower. In Asia, markets have reacted positively to the China data, allowing US futures to power higher. S&P 500 futures are 0.35% higher, Nasdaq futures have leapt 0.60% higher, while Dow futures have gained 0.20%.

With markets focusing on improved China retail sales data, Asian markets are moving higher as well today, helped along by the steady rally in US futures. Japan’s Nikkei 225 has risen by 0.45%, with South Korea’s Kospi adding 0.25%. In China, the Shanghai Composite is unchanged, but the narrower large-cap Shanghai 50 has jumped by 0.80%. The CSI 300 has added 0.15%. However, Hong Kong has fallen by 1.10% as China property worries, and the Alibaba summons weigh on sentiment.

In regional markets, Singapore has risen by 0.30%, while Taipei has rallied 0.70% higher. Jakarta is 0.20% higher, with Kuala Lumpur easing by 0.15%, and Bangkok remaining unchanged. With pressure still on the Philippine peso, and markets reeling from the unscheduled rate hike yesterday, Manila has dropped by 1.10% today.

In Australia, the slump in China’s iron ore prices and copper overnight has continued today and seems to be weighing on resource stocks. Additionally, the very impressive employment data yesterday has raised concerns the RBA will have to tighten faster and harder. Those headwinds have seen Australia underperforming today. The All Ordinaries and ASX 200 dropped by 0.85%.

With European markets on edge over Russian natural gas supplies, recessions, and Italian political instability, it is hard to see the losses of yesterday being reversed ahead of the weekend. In the US, stock markets are likely to have a very binary outcome to US Retail Sales. Strong data will lift rate hike fears. Additionally, we have earnings from Citibank and Wells Fargo today, and if the JPM/MS earnings yesterday are a guide, there won’t be much good news today either.