Stocks Higher Again After Weak Retail Sales – Dow up 0.9%
US Stock markets marched higher again yesterday as a much weaker than expected Retail Sales result increased hopes of a Fed rate cut. Investors once again took a glass half full approach to the market as Retail Sales numbers fell well short of expectation, the Dow led the way, closing up 0.91% followed by the S&P and Nasdaq, gaining 0.58% and 0.3% respectively. US treasury yields crept lower, the 2-year losing 1.5 basis points to trade down to 4.563% and the 10-year dropping 3 basis points to 4.234%. The data weighed on the dollar, the Dxy losing 0.3% on the day with UsdJpy dropping back under the 150.00 level. Oil jumped in line with the dollar fall, Brent gaining 1.5% up to $82.86 pre barrel and WTI jumping 1.8% back up to $78.03 per barrel, Gold also got a hike up on the weaker dollar to move back above the $2,000 level.
Gold Losing it Luster
Gold traders are watching upcoming US data with increased apprehension as the shiny metal dipped below the $2,000 per ounce level for the first time since mid-December. The higher-than-expected CPI print earlier in the week hit Gold hard, dropping it over $30 as Fed rate cut expectations were pushed out. Weaker Retail Sales numbers yesterday led to a bounce, but overall traders are still looking to sell on rallies in the current environment. Resistance is now sitting around the $2,030 level with support around the recent low at $1,985. Longer-term a break beneath the December low at $1,973 opens the way for a break down to the $1,900 level but much will depend on up coming US data prints and any safe-haven geopolitical concerns in the market moving forward.
Traders Focus on More US Inflation Data Ahead
It is set to be a relatively subdued start to the trading day with little scheduled on the event calendar for the APAC session, but we do have the 4th major data release out of the UK for the week once Europe opens with the Retails Sales numbers due out in London. Expectation is for a 1.5% increase on the monthly data, but traders are concerned that we may see another downside surprise like last month which could see the pound give back much of last night’s gain against the dollar. The major focus of the trading day will be the US PPI data due out early in the New York session with expectation sitting at just a 0.1% increase for both the headline and Core number. Later in the day we have the University of Michigan’s Consumer Sentiment and Inflation expectations data due out to take us into the weekend.
