Strong August Retail Sales and Jobless Claims Make Global Indices Trying Turnaround

U.S. equities are opening moderately lower on Wall Street, leaving major indexes well in the red for the week following the biggest pullback for the market in more than two years on Tuesday.

Meanwhile, sharply in focus, August retail sales in the U.S. came at +0.3% MoM vs. +0.2% consensus and -0.4% prior (revised from no change). Annually, retail sales increased 9.1%. Total sales for the June 2022 through August 2022 period rose 9.3% from a year before. Gas station sales jumped 29.3% YoY, while food services and drinking places gained 11.2%. The data shows, on one hand, that consumers mostly kept up with their shopping habits, although accounting for 0.1% MoM CPI in August, in absolute terms the increase was only +0.2% – still a sound surplus. The broader U.S. economy has been slowing, but consumers have remained resilient, and the job market remains strong.

Another important U.S. stats, the number of seasonally adjusted initial jobless claims, also came out in a positive note having declined by 5,000 to 213,000 in the week ending September 9, coming in at a lower headcount than forecast. The 4-week moving average decreased to 224,000, falling by 8,000 from the previous week's revised average.

Now, judging by the pricing in federal fund futures contracts, most investors fully expect a 75 basis-point increase when Fed officials gather at FOMC on Sept. 20-21 and see a roughly one-in-three chance they will opt for the bigger move. Bridgewater's Ray Dalio yesterday wrote in his LinkedIn space, that inflation may eventually force rates into the 4.5%-6% range and warned even an increase to the lower end of that band would lead to a roughly 20% plunge in stocks and 10% in the nation’s disposable income.

The list of best-performing stocks in the S&P 500 yesterday was dominated by energy companies, including Coterra Energy (CTRA), APA Corporation (APA), ConocoPhillips (COP), and Schlumberger (SLB). The sector cheered a rise in crude futures on indications higher volumes of oil will be required for heating this winter. Starbucks (SBUX) shares increased after the coffee retailer raised its outlook for sales and store expansion. Shares of Moderna (MRNA) advanced after the company’s CEO Stéphane Bancel suggested the drugmaker is actively marketing China’s access to its Covid-19 vaccine.

Honeywell (HON) and 3M (MMM) were the biggest underperformers in the Dow Jones, with both shares having recorded losses of more than 2%. Shares of Nucor (NUE) and its rivals declined as the big steelmaker downgraded its profit expectations. Shares of Union Pacific (UNP) and other major railroads were also derailed on the news of an intensifying union’s dispute that means a possible nationwide rail strike as early as Friday. Oracle’s (ORCL) quarterly earnings missed estimates, and shares of the business software company also tumbled.

Cryptocurrencies are trading in tight ranges today on the verge of a major software upgrade of Ethereum (ETHUSD). Bitcoin (BTCUSD) edged up to over $20,000 as of 4:20 p.m. CET. The prime event, known as The Merge, is expected to make Ethereum more energy efficient and transactionally faster.

Meanwhile, European indices are trying to trim losses and turn to shy gains. Thus, the German DAX rose a minuscule 0.03% at the time of writing, while the French CAC 40 was still down 0.47% at the same time. The British FTSE 100 increased 0.21% concurrently. H&M and Ryanair deliver sales results, while Adobe reports earnings.

On Fx front, the euro is trading 0.13% higher against the dollar, selling for 0.99998, while the British pound lost 0.36% against the greenback, to sell for 1.14947. Eurostat said in a report published earlier this afternoon, the international trade deficit in goods in the euro area rose in July to €34 billion, compared to a surplus of €20.7 billion in July 2021. Imports jumped 44% YoY to €269.5 billion, while exports rose 13.3% to €235.5 billion. Meanwhile, ECB's member Luis de Guindos gave his keynote speech at a conference in Lisbon.

In Asia earlier this morning, the China’s Shanghai Composite index lost 1.2% to 3,200, while Hong Kong’s Hang Seng index rose 0.4% to 18,930. China’s central bank left its benchmark lending rate unchanged. While other major economies are raising rates to cool inflation, the world's second-largest economy has been slowing and price increases have been moderate. The Kospi in Seoul shed 0.4% to 2,402, while Australia’s S&P/ASX 200 added 0.2% to 6,843.