US December retail sales disappoint

Thursday, January 15, 2015

US equity benchmarks experienced intense intraday selling pressure yesterday after a surprise fall in retail sales dented demand for risk assets on both sides of the Atlantic. Both the S&P 500 and DJIA closed lower for the fourth straight session on Wednesday while most major European benchmark indices ended the session on the back foot as the advanced reading for retail sales in December saw US consumer spending contract 0.9% m/m from 0.4% growth the previous month. Import prices fell 2.5% m/m thanks to a stronger US dollar, marginally less than the 2.7% m/m decline expected by market participants in a Bloomberg survey, however, the surprise fall in retail sales prompted investors to question the robustness of the US recovery. Investors have increasingly adopted a cautious approach more so in recent sessions after Tuesday’s release of the World Bank’s economic growth update, which highlighted concerns to the US economy from slowing global growth, particularly in China and the eurozone.

Spot gold prices rallied towards a 12 week high before being dragged lower by a stronger dollar as investors assessed the weaker than expected retail sales data. Prices rallied towards $1,245/oz on the data release before a stronger dollar saw these early gains erased with the yellow metal closing marginally lower on the day, at $1,228.72/oz. A stronger dollar, with notable gains against the euro and the pound saw the dollar index close back above 92.00 after intraday swings saw losses extend towards 91.613.

Asian equities posted steady gains during overnight trading despite the bearish undertones resonating across European and US equity markets yesterday. Encouraging moves higher across major benchmark stocks in the region were spurred by an Indian rates cut and Chinese credit growth exceeding expectations. Both the CSI 300 and Shanghai Composite added between 2.9%-3.6%, rebounding after the recent sell-off with financials leading the move higher as aggregate financing in December exceeded expectations of 1.2tn yuan with 1.69tn yuan of loans made. The data suggests that borrowing appetite remains fairly robust which acted as a boon for stocks across the region.

S&P 500 drifts lower as volatility spikes

SPX Index SP 500 Index SPVIX 2015 01 15 07 23 28

10 year US treasury yields pull back to 1.8%

USGG10YR Index US Generic Govt 2015 01 15 07 22 41

Gold prices touch twelve week high on intraday move

XAU Curncy Gold Spot Oz D 2015 01 15 07 43 38

Events for today

0001

UK

Dec

RICS House Prices

0800

DE

Q1

GDP

1000

EZ

Nov

Trade Balance

1330

US

Dec

PPI  Final Demand

1330

US

Jan

NY Fed Manufacturing

1330

US

w/e

Jobless Claims

1530

US

w/e

EIA Nat Gas

Topics: Gold, EUR, DXY
More from: Kash Kamal