Markets retreated while oil rebounded
US stock market ended the session lower for the fourth consecutive day as a weaker than expected December retail sales report released before the start of trading sparked investor concern over the pace of US economic growth.
As retail sales slumped in December by the most in almost a year investors are worried that the slide in oil prices hasn’t resulted in a boost to consumer spending. The ICE US Dollar Index, a measure of the dollar’s strength against a trade-weighted basket of six major currencies, fell 0.22% to 92.1030. Today at 14:30 CET Initial Jobless Claims for the week ended January 10, Continuing Claims for the week ended January 3 and December Producer Price Index will be released in US. The unemployment claims are expected to fall, the tentative outlook is positive for US dollar and lower unemployment readings will likely contribute to dollar strengthening. At 16:00 CET the Philadelphia Fed Manufacturing Index for January will be released. The consensus expectation for the index is a decline to 19.1 from previous month’s 24.3 level, a lower than expected reading may negatively affect the US dollar.
European stocks fell Wednesday as investors weighed the World Bank’s forecast of slower global growth and lower than expected retail sales data from the US, the world’s largest economy. Euro recovered from session lows after data confirmed that factory output across the euro-zone rose for the third straight month in November. As the euro-zone economy struggles to stave off deflation, the pressure on euro remains strong with investors looking forward to the
European Central Bank’s January 22 meeting when additional measures for expanding monetary stimulus program are expected to be announced. Today at 10:00CET the 2014 German GDP will be released, and at 11:00 CET November euro-zone Trade Balance will be published. The tentative outlook is positive for euro.
Nikkei is rising today after shedding more than 400 points in the previous two sessions. Yen advanced to its highest level in four weeks against dollar on disappointing retail sales in the US. The demand for safe haven asset may contribute to further yen strengthening if global equity markets continue to fall.
Oil rebounded yesterday from five and half year low as options expiration bolstered activity. The rebound is seen more technical as indicators signaled that oil was oversold. There are no signs global demand is picking to eliminate the supply glut. US crude production rose last week to highest level since 1983 even as prices slumped. Furthermore, Iraq plans to double exports to 300,000 barrels a day within weeks from its northern Kirkuk oil fields and continue boosting output further south.
Copper led a rebound in base metals after slumping to the lowest in more than five years as central bank data released in China indicated credit growth to 1.69 trillion yuan ($273 billion).
Natural gas rose for the third day in the biggest surge in 11 months as a blast of Arctic weather predicted to swoop into the US signaled increased demand after a mild December. Today at 16:30 CET the EIA Natural Gas Storage Change for the week ended January 9 will be published, with an expected decline of 131 billion cubic feet. A bigger than expected actual number may result in increase in gas prices.
Source: ifcmarkets – Markets retreated while oil rebounded
