Scoreboard: Data misfire

Wall Street slipped as retail and jobs data failed to inspire, while intensifying violence in Iraq saw the price of crude jump.

Softer-than-expected US data looks to have weighed on equities last night. Well, that and a flare-up of violence in Iraq as Kurdish fighters took the city of Kirkuk (an oil-rich region) following ISIS taking Mosul earlier in the week. Crude prices spiked as a result.

As for the data, US retail sales rose again in May, but by a weaker-than-expected 0.3 per cent. Markets had expected a 0.6 per cent lift. Ex-autos and gas sales were flat. Not great but it’s not as if US consumers were struggling or anything.

Then we saw jobless claims lift. Now, we need to be careful here because claims are low and they point to ongoing strong job gains. Yet claims did lift in the latest week, if only modestly, to 317k and headlines that read ‘worse-than-expected’ aren’t going to spark an aggressive bid.

Equities were weaker across the board, with Wall Street the key underperformer this time. At the bell, the S&P 500 was down 0.7 per cent (1930). With the Dow off 109pts (16734) and the Nasdaq off 0.8 per cent (4297). Over in Europe, falls were smaller -- flat really -- the Dax was down 0.1 per cent, the CaC fell 0.02 per cent and the FTSE 100 was off 0.03 per cent.

Forex. The interesting action here was on the British pound. Following the strongest employment growth since 1971, Mark Carney -- the Canadian import who rules the Bank of England as governor -- said that rates may go up sooner than markets expected. His rhetoric suggested he still wasn’t sure though, only noting that the decision (following the strongest growth in employment on record) was much more balanced now. Anyway, the British pound spiked up almost 120 pips to $US1.6921. Otherwise the Australian dollar sits at $US0.9421 cents, up about 40 pips from yesterday at 4.30pm (AEST). The euro was up about 20 pips to $US1.3553, while the Japanese yen sits at 101.6.

Rates eased a little overnight, the US 10-year yield down about 3bp to 2.596 per cent. The 5-year was down about 1bp to 1.681 per cent, while the 2-year is at 0.431 per cent. Australian futures pushed a little higher with 3s up 1 tick to 97.160, while 10s were 3.5 ticks higher at 96.215.

Commodities. As mentioned, crude spiked higher as a result of violence in Iraq. WTI was up 2.4 per cent ($106.8), while Brent surged 2.3 per cent to 112.6. Elsewhere, silver was 1.8 per cent higher, gold rose $12 to $1272, while copper fell 0.9 per cent.

Elsewhere, data was more upbeat. In the US, business sales rose 0.7 per cent in April with inventories up 0.6 per cent. US import prices then rose 0.1 per cent in May to be 0.4 per cent higher annually. Finally in Europe, industrial production surged in April, rising 0.8 per cent, well above the 0.5 per cent expectation. Annually, production is 1.4 per cent higher.

Markets today. The SPI suggests Aussie stocks will post a decent fall today -- 0.6 per cent. Otherwise the key data will be Chinese growth numbers -- at about 3.30pm (AEST) we see industrial production, retail sales and fixed asset investment. The final estimate of German GDP follows on at 4pm (AEST), while tonight we see eurozone employment numbers, British construction output and for the US, producer prices and consumer confidence (brought to you by Michigan University).

Have a great day. 

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