Spreadex Market Update
Dismal US retail sales pile on alongside copper pressure
An already negative trading session took a another hit as the USA presented a platter of dismal data as core retail and overall retails sales both came in much worse than expected. Analysts were expecting the USA to post slight core retail sales gains of 0.1%; instead, the figure fell to -1.0%, whilst overall retail sales also fell to -0.9%. What is worrying for a Federal Reserve seeking to raise interest rates is that cheap oil isn’t really making itself felt for the consumer, providing another condemnation of the fall in wage growth in the USA.
This led to the worst opening for the Dow Jones since December 12th, as the US markets had to deal with a trading environment that had already been poisoned by the fall of copper and the struggles of the European indices. And after being dominant for so long, the dollar has spent the day shedding points against the pound, euro and yen as the greenback was another victim of a savage Christmas period for retailers.
Despite oil rebounding slightly, copper has replaced the black stuff has the FTSE’s Achilles heel. The UK index has been punished by the metal hitting new 6 year lows, as its mining stocks provided a reproduction of the kind of trading the FTSE’s energy-stocks have seen in the past few weeks. It doesn’t help copper that commodities in general are suffering, as oil’s decline leaves its sticky fingers all over the sector. There are also fears that this decline is indicative of larger issues, but with so many volatility inducing factors at the moment, the full meaning of copper’s fall is being obscured.
Ahead of its decisive week next week, with the ECB meeting and Greek election expected to introduce more volatility than normal into the markets, the Eurozone received another slice of instability as Italian President Giorgio Napolitano resigned, setting the stage for an Italian election on the 29th January. This, alongside the pressure from copper and mixed investor reactions to the ECJ OMT decision this morning, meant that the Eurozone indices spent the afternoon trading at a loss across the board.
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