The relief rally in stocks on apparently easing tensions with North Korea didn’t last very long as bulls started to run out of energy Tuesday. This suggests that overextended markets entering their historically weakest time of the year have been looking for an excuse for a correction and North Korea happened to be it. Besides, easing tensions on one front doesn’t many that the many other risks facing stocks have suddenly gone away.
US retail sales came in surprisingly strong considering that July auto sales had disappointed badly, growing more than expected and overcoming the higher hurdle of a big upward revision to June. The street wasn’t having any of it, however, as retail stocks were hammered again Tuesday. In particular, Dicks Sporting Goods plunged 21.7% on a guidance cut, Advance Auto Parts retreated 20.3%, Coach was crushed for a 13.8% loss. Home Depot fell 3.0% on a positive report and dragged home improvement competitor Lowes to a 3.8% loss on the day.
The US Dollar saw a more positive response to the strong US economic numbers. In addition to the falling defensives gold and JPY, the greenback gained on GBP which sank on soft UK inflation data, and against resource currencies like CAD, AUD and NZD.
Oil had an active day, selling off early but then bouncing back and gaining support from another big drawdown (9.1 mmbbls) in API crude oil inventories. Oil may remain active through tomorrow’s weekly DOE reports with traders looking for a smaller 3.5 mmbbl drawdown.
Thursday also brings more housing data for the US, and employment numbers for the UK. NAFTA talks get underway bringing the potential for a tweetstorm from President Trump that could influence trading in CAD and MXN. FOMC minutes are also due which the street may try to read something into about September but probably won’t get far with the much bigger Jackson Hole conference coming up in a couple of weeks.
There have been no major announcements after the US close today.
Significant announcements released overnight include:
US ADP crude oil inventories(9.1 mmbbls)
US retail sales0.5% vs street 0.4%
US retail ex auto0.5% vs street 0.3%
US Empire manufacturing25.2 vs street 10.0
Canada existing home sales(2.1%) over month vs previous (6.7%)
Germany GDP2.1% vs street 1.9%
UK consumer prices2.6% vs street 2.7%
UK core CPI2.4% vs street 2.5%
UK retail prices3.6% vs street 3.5%
UK producer input prices6.5% vs street 6.9% vs previous 9.9%
UK producer output prices3.2% vs street 3.1%
UK house prices4.9% vs street 4.3% vs previous 4.7%
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
11:30 am AESTAustralia wage price indexstreet 1.9%
9:00 am BSTItaly GDPstreet 1.4% vs previous 1.2%
10:00 am BSTEurozone GDPstreet 2.1%
9:30 am BSTUK jobless claimsprevious 6K
9:30 am BSTUK 3M jobs changestreet 97K vs previous 175K
9:30 am BSTUK unemployment ratestreet 4.5%
9:30 am BST UK average weekly earningsstreet 1.8%
TBA EDTNAFTA renegotiations get underway between US, Canada, Mexico
8:30 am EDTUS housing startsstreet 1,220K
8:30 am EDTUS building permitsstreet 1,250K
10:30 am EDTUS DOE crude oil inventoriesstreet (3.5 mmbbls)
10:30 am EDTUS DOE gasoline inventoriesstreet (0.9 mmbbls)
10:30 am EDTUS DOE distillate inventories street 0 mmbbls
2:00 pm EDTFOMC July meeting minutes
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