Spreadex Market Update
Dollar surge harms Dow after better than expected US data
The stronger dollar caused the Dow Jones to merely linger around new record highs as the US index abandoned the growth it was promising in the pre-markets. Things weren’t helped by a weaker than expected showing from Wal-Mart, which posted its Q1 2016 earnings release before the bell. Unsurprisingly given the recent US consumer sentiment figures, Wal-Mart’s sales fell by around 0.5% year-on-year to $114.8 billion; now of course, that is still an astonishingly high figure, but investors are looking for progress, not size, and that miss in revenue was joined by earnings per share of $1.03 against $1.05 forecast and a 7% fall in profits to $3.34 billion. This miss had immediate repercussions for the company’s share price, which fell by over 3%; it also doesn’t bode well for Wal-Mart’s mega-store rivals Target and Best Buy, who report on Wednesday and Thursday respectively.
If the US was looking limp off the back of its dollar woes, then the Eurozone was basking in the damage the greenback was doing to the euro. In a rare sight, the region managed to avoid a big-swing southwards and held onto its robust gains for the entire day. It harks back to the golden days before Syriza were elected and QE rumours and Draghi whispers pushed the Eurozone higher and higher. Yet not to be forgotten, Greek ministers have begun to float June 5th as the latest ‘absolute deadline’ for a bailout deal as the country faces €1.5 billion in IMF payments across that month.
After greeting its negative inflation turn with a shrug the FTSE had little to offer as Tuesday continued, chugging along near its beloved 7000 level without really threatening to break through this ceiling. Dollar-inspired declines in oil and copper hampered the FTSE’s important commodity stocks, meaning that the UK index never had the fuel to match the growth of its European cousins.
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