Retail sales unexpectedly jumped 0.7% in August versus -0.8% expected
Wall Street stocks edged lower overnight as better-than-expected data out of the United States underscored the strength of the country’s economy, suggesting the Federal Reserve would start policy tightening this year. As risk sentiment deteriorated, all three major U.S. stock indexes reversed the previous session’s gains. Retail sales unexpectedly jumped 0.7% on a monthly basis in August versus -0.8% expected. Excluding automobiles, retail sales were up 1.8% versus -0.2%. Furthermore, the Philadelphia Fed manufacturing index advanced to 30.7 in September versus 18.8 expected. As such, The S&P 500 and the Dow Jones shed 0.16% and 0.18%, respectively, while the Nasdaq Composite gained 0.13%.
Asian equities were mixed-to-higher on Friday, with persistent concerns over a prolonged outbreak of coronavirus capping gains in the regional markets. Tokyo’s Nikkei 225 index added 0.58%, the Hang Seng in Hong Kong gained 1.03%, the Kospi in Seoul edged 0.33% higher, and the Shanghai Composite index added 0.19%, while the S&P/ASX 200 in Sydney declined 0.76%.
European stocks advanced on Friday following yesterday’s gains, with the pan-European Stoxx 600 adding 0.6% in early trade. On the data front, U.K. retail sales fell unexpectedly in August, dropping 0.9% month on month against an average forecast for a 0.5% rise. The flash gauge of the consumer sentiment for the month of September will be the only release later in the North American session.
In currencies, the dollar rallied across the market, boosted by strong retail sales data. As such, the euro plunged below 1.1800 to extend losses to three-week lows around 1.1750 before bouncing slightly. Meanwhile, in her recent remarks, ECB President Christine Lagarde said the recovery in the Eurozone is faster than anticipated six months ago mostly due to a rapid vaccination campaign. She also added that the economy is back from the brink but it is not out of the woods yet.
Today, the euro bounced from the 1.1750 area to 1.1785. However, the pair failed to extend the recovery and retreated partially in recent trading, suggesting the common currency could stay on the defensive for the time being amidst rising bets for the Fed’s QE tapering at some point later in the year.