- Global stocks have started Friday the 13th on the wrong foot,
- with not only Hong Kong GDP unexpectedly tumbling by 0.4%, the worst print in years while retail sales fell for a thirteenth straight month in March,
- This is the longest stretch since 1999 as the Chinese hard landing spreads to the wealthy enclave,
- But also following a predicted collapse in Chinese new loan creation, which will reverberate not only in China but around the globe in the coming weeks.
- The latest overnight drop in the Yuan hinted that should the recent USD strength continue, China will have no choice but to repeat its devaluation from last summer and winter.
Renewed Chinese concerns and, following devastating retail earnings, rising fears about a US recession as the US consumer has not been so weak in years,
- European shares have given up all their gains for the week on Friday
- emerging-market equities headed for a fourth-straight weekly loss as flagging corporate earnings eroded investor confidence.
- Oil retreated from a six-month high and iron ore fell to a two-month low.
- Even Germany’s strongest GDP print in two years (0.7%, up from 0.3%, and 2.7% annualized) wasn’t sufficient to boost the euro, while bonds rose.
The big event today (and the week), and coming on the back of what’s been a relatively quiet week for data, will be the US retail sales numbers for April due out at 8:30am.
The interest in the number will have increased following some of the terrible retailer earnings reports in recent days.
- Macy’s, Walt Disney and Kohls are a selection of these while last night after the close.
- Nordstrom added to the pain for the sector after missing earnings and revenue expectations and lowering its profit guidance for the full year, sending the share price down some 17% in extended trading.
Expectations are for a bounce back in the April data this afternoon, boosted by a rebound in vehicle sales and a slight increase in gas prices. The current consensus forecast for the headline is +0.8% mom. The retail control element (which is the core of the report) is worth keeping an eye on though. DB’s brand new permabear Joe LaVorgna expects this to rise by just +0.2% and if so, will mean the reading is up only +2.1% annualized through April which would be the weakest start to the year since the first four months of 2013.
“People just don’t seem to believe in growth for the equity market and prefer staying on the sidelines,” said Chris Beauchamp, a London-based market analyst at IG Plc. “Investors are nervous ahead of retail sales, which has been an underlying theme this week.”
The MSCI Emerging Markets Index fell 1.1 percent, erasing this week’s gain to leave it down 0.9 percent. The Shanghai Composite Index slid 2.6 percent in its fourth weekly drop and longest run of declines not seen since May 2014. The Hang Seng China Enterprises Index fell 1.3 percent and is down 10 percent from the April high, entering a correction.
WTI trades near $46, halting 3 days of gains that incl. 6-mo. high yday with pressure from stronger dollar. Brent, as is traditionally the case, mirrors WTI retreat, unable to hold earlier move higher on Nigerian force majeure and Glencore manipulation.
- S&P 500 futures down 0.3% to 2053
- Stoxx Europe 600 down 0.7% to 330.82
- MSCI Asia Pacific down 1.3% to 125.95
- US 10Yr yield down 3 bps to 1.72%
- Dollar index up 0.2% to 94.29
- WTI oil futures down 1.0% to $46.3/bbl
- Gold spot up 1% to $1275.82/oz
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