Pound Weaker On Retail Sales, Dow Slips

Pound Weaker On Retail Sales, Dow Slips

The British pound weakened today against the dollar and the euro, after UK retail sales came in lower than expected for March.   



Pound Weaker On Retail Sales, Dow Slips
Pound Weaker On Retail Sales, Dow Slips

A 0.4% rise in volumes had been expected, but instead sales fell 0.5%, while February’s change was revised down slightly from 0.7% growth to 0.6%. March’s softness means that the annual change slows to +4.2% from +5.4% in the previous month and the weakness derives from plummeting sales at gas stations — excluding this segment, the numbers look fairly robust. Despite this, the Bank of England is unlikely to see anything in this report to hasten their decision of when to tighten.

EUROZONE SLOWING

European stock indices moved lower earlier following the release of indicators that suggest the eurozone’s economy continues to stutter. The flash composite eurozone PMI, which  seeks to gauge the combined performance of the services and manufacturing sectors, eased to a reading of 53.5 for April, down from March’s final 54.0, and undershooting the consensus estimate of 54.4. Falls in both services and manufacturing lay behind the overall decline, the services PMI falling from 54.2 to 53.7 and manufacturing dropping from 52.2 to 51.9. While all these readings are above 50, and therefore still indicative of expansion, the declines from the previous month suggest the rate of expansion is slowing, which is concerning considering the ECB’s stimulus measures. The German DAX has slumped 1.19% to 11,727 today, while the French CAC 40 is off 0.92% at 5163.

MIXED US INDICATORS

April’s flash reading for the US manufacturing PMI, released shortly after the opening on Wall Street, came in at a disappointing 54.2, down from 55.3 mid-month in March and 55.5 at the end of March. Expectations had been for an improvement to 56.0.

US jobless claims failed to meet expectations today, but still point to a healthy employment report for April. Initial jobless claims rose 1000 last to 295,000 (versus expectations for a fall to 286,000), and the four-week moving average moves up to 284,500 from 282,750 in the week prior, though it is in the contrast with how things were looking month ago that a clearer picture is drawn. The four-week moving average was over 20,000 higher a month ago and, significantly, the weeks in question are the sample weeks for the official monthly Employment Situation report. Based on that, expectations will be bolstered for a bounce in April’s numbers (set to be released two weeks tomorrow).

EARNINGS SEASON

Earnings continue to come thick and fast, with industrial-heavyweight Caterpillar ($CAT) beating expectations both above and below the line, while diversified-tech giant 3M ($MMM) plunged close to 3% after disappointing with both earnings and revenue. 3M blamed its revenue woes on the strength of the dollar, and PepsiCo ($PEP) and General Motors ($GM) both told similar stories. Amazon ($AMZN), Google ($GOOG/$GOOGL) and Microsoft ($MSFT) are among the big names reporting after the market close tonight.

US stock indices were down in early trading in New York. Shortly after the open, the Dow Jones was off by 48 points or 0.27% at 17,990, while the S&P 500 Index fell 0.13% to 2105.3.


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