By Pinchas Cohen
Key Events
Following a lackluster Asian session, European shares rose as investors are hesitant ahead of the Federal Reserve minutes release.
Yesterday, European trading gained as the STOXX 600 Index climbed after German GDP for Q2 extended its growth jump.
The bulk of US equities yesterday halted a two-day advance, as the S&P 500 and NASDAQ Composite drifted lower, while the Dow Jones edged higher.
Global Affairs
In the current economic environment, after the fears of the 2008 crash and the unprecedented actions of global central banks, the greatest challenge developed countries economies are ironically also what it hopes to count on – consumer spending. This data has become the focus of investors and analysts in interpreting a barrage of economic reports.
The US Retail Sales data was released, showing solid levels of spending by the American public. The report advanced in July by its most since YTD, with widespread gains ranging from department stores to building materials, signifying a healthy start to consumer spending in the beginning of the third quarter.
The latest data revealed that the American consumer is not worried to spend his income, in a sign of confidence in the US economy. This behavior bolstered prospects that economic strength and growth will accelerate in the second half of the year in the world’s largest economy. It also boosted speculation, following speeches by certain FOMC members, that the Federal Reserve might raise interest rates again this year.
After a diminishing threat of war with North Korea, the dollar—also on good retail sales numbers—rallied while Treasuries remained steady after yesterday’s climb and the yen extended its slump.
Gold fell, as investors preferred to redirect their funds to growth assets, while the price level reached a level where sellers abound for the third time following April and June.
Oil is climbing on falling US crude stocks, as it reached its June 21 short term uptrend line. Global glut is still weighing it down though, lowering prices further away from the $50 level, after reaching its downtrend line for the first time since February.
Yesterday, sterling fell to a five-week low, after UK inflation unexpectedly remained flat in July and clouded the outlook for rate increases. However, the pound has since rebounded, after it initially extended its third day of declines.
Market Moves
Stocks
- The STOXX 600 Index increased 0.5 percent as of 8:24 a.m. in London, its highest in a week.
- The UK’s FTSE 100 gained 0.5 percent, its highest in a week.
- Germany’s DAX rose 0.6 percent to its highest level in more than a week.
- S&P 500 Futures climbed 0.2 percent.
Currencies
- The Dollar Index increased 0.19 percent, losing ground after climbing 0.29 percent, nearing the 94.13 high yesterday.
- The euro gained 0.1 percent to $1.1745.
- The British pound climbed less than 0.05 percent to $1.2871.
Bonds
- The yield on 10-year Treasuries climbed less than one basis point to 2.27 percent.
- Germany’s 10-year yield gained two basis points to 0.45 percent, its highest in more than a week.
- Britain’s 10-year yield increased one basis point to 1.098 percent, its highest in a week.
Commodities
- Gold decreased 0.1 percent to $1,270.34 an ounce, its weakest in more than a week.
- West Texas Intermediate crude rose 0.6 percent to $47.82 a barrel, its biggest advance in a week.