Stock Indices Near Records In Muted Trading

Stock Indices Near Records In Muted Trading

The Dow Jones has managed to advance for the last four consecutive trading sessions, setting new closing records each day, but with a vacuum in terms of economic catalysts right now, the impetus has, momentarily at least, gone out of the market.

Stock Indices Near Records In Muted Trading
Stock Indices Near Records In Muted Trading

The bond market is closed for Veteran’s Day and there are also no US or Canadian reports released today. Consequently, volatility and volumes are light, and the leading stock indices have eased off from yesterday’s record closes.

By early afternoon in New York, the Dow Jones was down 0.10% or 18 points at 17,596, while the broader S&P 500 index was off by just 0.04% at 2037.4.

Key earnings, retail sales due later this week
Despite the subdued nature of today’s stock trading and the paucity of market-moving news so far this week, things are set to become more lively in terms of economic releases in the next few days. Dow component Cisco Systems ($CSCO) reports its quarterly earnings tomorrow, followed by retail bellwether Wal-Mart ($WMT) on Thursday.

More clues about the retail sector will follow on Friday, in perhaps the highlight of the macroeconomic calendar for the week, with the release of October’s retail sales. Retails sales posted a 0.3% decline in September, following August’s 0.6% surge. Despite those declines reported last month, electronics saw an uplift from the release of the new iPhones in mid-month September, and a continuation of this boost would seem likely for October. Falling gasoline prices will act as a drag though, as the retail sales report measures the value of total receipts. Overall, a 0.2% rise is expected for October. Such a rebound would be important for fourth-quarter GDP, as retail sales measures a substantial part of consumer spending.

Yen falls to seven-year low
In the forex market, USD/JPY rose 0.3% to 115.20, having earlier risen to 116.10, a seven-year high for the currency pair, after media reports suggested Japanese Prime Minister Shinzo Abe may delay a rise in sales tax due next year and is getting ready to call a snap election in December. Japan’s economy has been hindered by a hike in its sales tax made last April, leading to a surprise expansion in the Bank of Japan’s monetary stimulus last month in an attempt to meet the big ask of its 2% inflation target set for next year.

Japanese newspaper Yomiuri claimed Mr Abe is considering deferring a second hike in sales tax and could call an election next month. Mr Abe, speaking in Beijing where he is attending the Asia-Pacific Economic Cooperation (APEC) summit, said he could not comment on speculation. He also said that the Bank of Japan’s huge stimulus program is designed to fight deflation and boost growth rather than weaken the yen to give Japan an edge over other exporting nations.

‘The Group of 20 nations recognise the BOJ's stimulus programme is aimed at ending deflation and supporting domestic demand,’ said Mr Abe. ‘Japan abides by the agreement of G7 and G20 nations that currency rates ought to be determined by markets.’

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