Solid US retail sales conjures spectre of rate-hike, spooks Dow Jones

The tone of Thursday’s trading began to change after the US open, with the afternoon’s data taking its toll on the Dow Jones.

Though the US retail sales were merely as expected, they did bring with them an upward revision for the previous month’s figures. Jobless claims, meanwhile, may have been slightly higher than forecast, but anything below 300k is still a Fed-pleasing number. These figures would likely have reassured the central bank after the Chinese hijinks of the past couple of days, and in theory still leave a September lift-off on the cards. This meant the US futures’ tentative gains were wiped out, leaving the Dow in the red as the afternoon went on.

Like the Dow the FTSE lost its lustre this afternoon as Brent Crude sank below $50 per barrel once again, leaving the index’s oil stocks to join the already dismal mining division. With little on the horizon until next Tuesday’s inflation data, the FTSE is likely to remain in the thrall of these commodity movements as the week wraps up.

Investors appeared satisfied with the drip-fed information about the third Greek bailout this afternoon, leaving the DAX and CAC in the green as their indices colleagues faltered. Unconfirmed reports suggest that Greece would receive the first €23 billion instalment of the €91.7 billion (€85.5 billion in aid and €6.2 billion in privatisation revenues) bailout later this month. That is, if the bailout passes successfully through Greek parliament AND the Eurogroup tomorrow AND THEN the Bundestag after that. Apparently among the documents sent to the region’s finance ministers is a bridging loan contingency plan, just in case someone (cough*Schauble*cough) gets in the bailout’s way.

The European Commission, ECB and ESM also produced a report today highlighting their fears over the sustainability of Greek debt. In the report the 3 members of the currently disbanded ‘quadriga’ (with the IMF, to Germany’s dismay, still apparently sitting this one out) stated that ‘an appropriate combination of extension of maturities and grace periods for principals and interests’ would mean a haircut could be avoided. This supports the view put forth by German deputy finance minister Spahn, and presumably by extension Schauble, and echoes the sentiment of the IMF; now they just need to actually implement the measures everyone seemingly agrees on.