US Markets set to open higher ahead of retail sales
US markets look set to open higher after more weak Chinese economic data and ahead of the key US retail sales release. Futures suggest the S&P 500 will open 5 points higher at 1,873, with the Dow Jones expected to open 33 points higher at 16,373.
Yesterday saw the S&P 500 stage a late comeback and edge out a small gain for the day, while the Dow Jones just missed out finishing slightly down.
Chinese industrial production and retail sales disappointed overnight at 8.6% vs. an expected 9.5% and 11.8% vs. 13.5% respectively.
The Reserve bank of New Zealand has officially started the developed-world tightening cycle. The RBNZ raised its Official Cash Rate by 0.25% to 2.75% as expected
The standoff continues between Russia and Ukraine over the fate of the Crimea. Markets may be increasingly concerned about possible sanctions on Russia and the likely backlash. Russian officials and businessmen have supposedly been preparing for the kind of sanctions seen in Iran. This is likely a ‘preparing for the worst, hoping for the best’ approach, as sanctions that harsh would definitely have repercussions on European economies. Sanctions might include freezing Russia’s foreign reserves and banking assets, lending to Russian companies as well as penalties on trade, including energy. UK and European banks would be directly affected by restrictions on lending, while companies trading with Russia could see big drops in revenue.
US retail sales for February are released today. Retail sales have been dropping since October with potentially the last couple of releases impacted by adverse weather conditions. With the weather having improved we could likely see some improvement above the lowered expectations of a 0.3% rise. That said, even if we do see a pick-up in sales for February, the bigger picture for retail sales looks bleak. Approximately a billion square feet of retail space is sitting unoccupied in the US with all the big retailers, including Wal-Mart, closing stores and issuing profit warnings.
Continuing the retail theme, Dollar General (DG), the US’s version of Poundland, announces 4th quarter earnings today. EPS is expected at $1.01 on revenue of $4.62bn. Any beat or miss of expectations could take an extra boost from the results of the retail sales figures.
Herbalife (HLF) got dumped en masse yesterday, with prices down as much as 17%. Hedge fund manager Bill Ackman’s short position may have turned a corner after the Federal Trade Commission announced a formal investigation into the company.
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