London (CNN Business)Retail sales data from the world’s two largest economies could set the tone on Wall Street on Friday. The first round, from China, suggest the coronavirus recovery could take longer than expected.
Retail sales in China declined 1.1% in July compared to the previous year, surprising analysts who had expected a return to growth after months of falling sales caused by the pandemic.
What a WeChat ban would mean for AmericansMonths have passed since China eased its most restrictive lockdown measures, and continued retail weakness suggests that some shoppers have not yet returned to their pre-pandemic spending habits.
More bad news: While fixed asset investment contracted by less than expected, industrial output figures fell short of analyst estimates.”The latest data suggest that China’s economy continued to recover in July, though less quickly than expected,” said Martin Rasmussen of Capital Economics. Read More”A slowdown in the recovery was always likely at some point as the initial boost from re-opening faded. And we still anticipate a further gradual improvement in activity in the coming months on the back of policy support,” he added.US retail sales are up next. Economists expect an increase of 1.9%, according to data provider Refinitiv. That would be a significant drop off from June, when shoppers flooded back to stores and boosted sales by 7.5%, compared to the previous month.The surge in coronavirus cases in July has dashed hopes for another strong month. Instead, some analysts wonder whether retail sales turned negative last month. “The recent spike in Covid-19 cases is hurting confidence,” analysts at ING wrote in a recent research note.”It is also leading many state governors to reverse course on their re-opening plans as they worry about strains on their healthcare systems if rising infection rates are left unchecked. The result is that businesses that had re-opened are being forced to close again with workers losing their jobs,” they added.For the latest on America’s recovery, check out our dashboard here.
Fortnite maker goes to war with Apple and Google
The maker of Fortnite is suing Apple (AAPL) and Google (GOOGL) after the tech giants removed the wildly popular online video game, which boasts hundreds of millions of registered players, from their app stores Thursday.The companies said they blocked Fortnite because its developer, Epic Games, violated their guidelines by announcing a way for players to make in-game purchases without using Apple and Google’s proprietary payment systems.It quickly became clear that the suits were not a spur of the moment decision by Epic. The complaints ran to 60 pages each, and one of the lawyers involved is Christine Varney, who ran the Justice Department’s antitrust division during the Obama administration.Epic then added insult to injury, releasing a video parodying Apple’s iconic “1984” ad, casting Apple in the role of villain. It also threw Google’s “Don’t Be Evil” slogan back at the tech company, and accused the firm of having “relegated its motto to nearly an afterthought.”The parody video is a trip: Watch it here. The controversy began when Epic Games announced Thursday it will offer a permanent 20% discount on Fortnite’s in-game currency if players purchase directly from Epic, instead of going through Apple or Google. At issue: Apple and Google app stores take a 30% cut of in-app sales. Epic CEO Tim Sweeney thinks that’s too much.”The 70/30 percent split was a breakthrough more than a decade ago with the advent of Steam, the Apple App Store, and Google Play,” Sweeney said in an interview with Game Informer. “But today, digital software stores have grown into a $25,000,000,000+ business worldwide across all platforms, yet the economies of scale have not benefited developers.”The play: Apple, Amazon, Facebook and Google are being investigated in the United States for potential anticompetitive behavior. “Apple’s removal of Fortnite is yet another example of Apple flexing its enormous power in order to impose unreasonable restraints and unlawfully maintain its 100% monopoly over the iOS in-app payment processing market,” Epic said in its legal complaint.Apple’s policies have attracted the attention of international competition regulators, as well. Earlier this year, the European Commission opened two antitrust investigations into Apple’s App Store, citing a complaint by Spotify.
The Netflix of China faces US probe
US regulators are examining allegations of inflated earnings at iQiyi (IQ), the online streaming provider often referred to as the “Netflix of China.”Shares of the Nasdaq-listed company fell more than 10% in premarket trading after iQiyi said the US Securities and Exchange Commission had opened an investigation following a controversial report alleging massive fraud at the firm.The report, released in April by Wolfpack Research, accused iQiyi of “committing fraud well before its IPO in 2018,” and continuing to do so since then. It alleged that the company had inflated its revenue and user numbers by up to 44% and 60%, respectively.Response: iQiyi pushed back on the allegations at the time, asserting in a statement that “the report contains numerous errors, unsubstantiated statements and misleading conclusions and interpretations.”The company has launched its own internal review and said it expects a “positive” outcome.
Up next
US retail sales data for July will be released at 8:30 a.m. ET.
Also today:
- US industrial production numbers are out at 9:15 a.m. ET.
- The University of Michigan Consumer Sentiment report is also on tap.
Source: edition.cnn.com