US markets shrug off weaker data

Friday, February 14, 2014

Wall Street managed to close higher yesterday despite weaker retail sales and rising initial weekly jobless claims as the S&P 500 and DJIA added 0.58% and 0.4% respectively. Retail sales fell 0.4% m/m in January from 0.2% growth the previous month while initial weekly jobless claims rose to 339K for the week ending Feb 8th, 9,000 more than analysts’ expectations according to a Bloomberg poll. Investors largely shrugged off the bearish figures and after a weaker open markets were supported higher, encouraged by an increase in the debt limit until 15th March 2015 and comments from Janet Yellen which further reinforced the Fed’s commitment to slowly withdraw stimulus and ensure rates remain low until labour market conditions improve. For the day ahead investors will be paying close attention to US industrial output, import and export prices and the University of Michigan sentiment index as they look for further market catalysts.

Chinese equity indices were encouraged by the bullish US sentiment with the CSI 300 and Shanghai Composite adding 0.7% and 0.83% overnight respectively. Underlying conditions still remain fragile however, as inflation remained subdued on producer prices, extending their decline to -1.6% y/y in January as demand moderation impacts the world’s second largest economy. CPI rose 2.5% y/y in January according to the NBS, but figures have been largely distorted by the week long Lunar New Year celebrations which could partly account for the slowing inflation. Japanese stocks dropped sharply during overnight trade, with the Nikkei losing 1.53% and the TOPIX shedding 1.33% as the yen strengthened further, hurting exporters. After pushing back above 102.50 against the dollar at the start of the week the yen dropped towards 101.50 in early morning trade.

Italian Prime Minister Enrico Letta has been ousted in favour of Matteo Renzi in a move that has ushered in the country’s third unelected government in just over two years. In a move that would have caused the euro to trade with increased volatility and sovereign yields to drop in the past, markets remained relatively firm with the euro holding between 1.3670-80 as it resisted significant selling pressure.

 Chinese producer prices continue to fall as consumer price inflation steadily increases

CNCPIYOY Index China CPI Yoy 2014 02 14 07 49 36

A stronger yen puts pressure on Japanese equity markets

JPY Curncy Japanese Yen Spot 2014 02 14 07 56 26 


Events for today: Friday, 14 February 2014

1000

EZ

Q4

GDP Flash

1330

US

Jan

Import/Export Prices

1415

US

Jan

Industrial Output

1415

US

Jan

Capacity Utilization

1455

US

Feb

University of Michigan survey

FN:

Mar Sugar (LIFFE)

Topics: Equities, JPY
More from: Kash Kamal