Scoreboard: Retail fail

Wall Street put in a lacklustre performance following weaker-than-expected US retail sales.

Disappointing retail data out of the US weighed on the market last night as American stocks struggled to make gains.

The consensus was that sales would rise by 0.4 per cent, but instead, sales rose by just 0.1 per cent, with sales ex-auto and gas off 0.1 per cent. Soft numbers for sure, although that follows strong gains of about 1.5 per cent the month prior following upward revisions to past data.

Still, equities didn’t weaken and that’s saying something after the strong gains in the prior session. It was probably those upward revisions and the fact spending growth last month was its highest since 2010 that buoyed the market and helped stave off a worse result following the headlines.

Equities on Wall Street rose 0.04 per cent on the S&P500 (1897), with the Dow about 19pts higher at 16715. By sector, there wasn’t really much in it, although tech stocks on the Nasdaq underperformed with a 0.3 per cent loss (4130) on that index. Otherwise, in Europe the Dax was 0.5 per cent , the CaC was 0.3 per cent higher and the FTSE100 rose 0.3 per cent as well.

Commodities generally had a mixed session with small moves either side of zero. That is except crude and especially WTI, which rose 1.2 per cent ($101.8), while Brent rose 0.8 per cent to $109.3. This, in part, followed comments by the US government that it was reconsidering its ban of domestic crude exports. The other part, of course, are events in Ukraine, with separatists seeking to join Russia. Otherwise gold fell a couple of dollars to $1293, silver was flat and copper was off 0.5 per cent.

Rates fell overnight as US Treasuries rallied in the wake of those retail sales figures. From a high yield of 2.655 per cent just before the figures were released, the 10 year yield was then 5bp lower for the session, closing at 2.609 per cent. The 5 year yield followed a similar pattern, falling 5bp to 1.613 per cent, while the 2 year sits at 0.375 per cent.

Forex markets drove euro down overnight, the unit falling about 60pips to 1.3702 in largely one-way traffic. Sterling followed suit, falling 40pips to 1.6826 while Yen was at 102.27. As for the Australian dollar, the unit was little changed at 0.9358 with a high around 0.9382. There wasn’t a lot of action around the budget, a modest bid developed about 30 minutes after, but that was about it.

Elsewhere, business sales out of the US were strong, rising by 1 per cent in March with inventories rising 0.4 per cent. Import prices were then reported to have dropped 0.4 per cent in April, leading to a 0.3 per cent annual decline. Chinese data out yesterday showed industrial production expanding at an 8.7 per cent annual pace, down from 8.8 per cent last month. Retail sales surged 11.9 per cent, after a 12.2 per cent gain, while fixed asset investment was strong, rising 17.3 per cent after a 17.6 per cent annual gain last month. Finally in Germany, the ZEW survey of investor sentiment shows perceptions of the current situation improved, the index rising to 62.1 from 59.5. Economic sentiment fell however, the index slipping to 33.1 from 43.2.

In markets today, the SPI suggests Aussie stocks will be flat today following the US lead and it’ll be pretty flat in terms of data as well -- there isn’t much for our region. Tonight, key data includes the UK employment numbers, Euro one industrial production, and the Bank of England’s inflation report. For the US, only producer prices are due.

Have a great day.