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Retail sales & earnings, Ukraine rocket incident, U.K. CPI - what's moving markets

Economy Nov 16, 2022 06:46AM ET
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By Geoffrey Smith 

Investing.com -- The dollar falls and European currencies breathe a sigh of relief on signs that the missile that hit Polish territory on Tuesday was, in fact, fired by Ukrainian air defense forces rather than Russia. Crude oil prices have soon found another reason to be nervous about geopolitical risk, however. The U.S. session is likely to focus on the consumer, with retail sales data for October set to outpace inflation, and earnings from Target (NYSE:TGT), TJX (NYSE:TJX) and Lowe’s (NYSE:LOW) to follow Walmart's (NYSE:WMT) impressive report on Tuesday. Stocks are indicated flat ahead of the open. Growth-stock bellwether Nvidia (NASDAQ:NVDA) reports after the bell. And the inflation picture goes from bad to worse in the U.K. Here's what you need to know in financial markets on Wednesday, 16th November. 

1. Retail sales set to outpace inflation; can Target match Walmart?

The U.S. will report retail sales data for October that are set to outpace the monthly rise in prices for the first time in several months.

Retail sales are expected to have risen by 1.0% from September, compared to an increase of only 0.4% in the consumer price index. If that turns out to be the case, it will restore a bit of hope about the Federal Reserve’s arguments that it can engineer a ‘soft landing’ for the U.S. economy over the coming months.

The overall number is likely to be inflated by rising spending on gasoline, but core sales are expected to have risen 0.4% - also a little ahead of the 0.3% core CPI reading.

Company-level data from the retail sector is set to continue with reports from Target and TJX. Lowe’s has already reported, beating expectations on both top and bottom lines.

2. Europe breathes out amid signs that missile explosion in Poland wasn't fired by Russia

The dollar retreated and European currencies rose after reports playing down the risk that NATO will be dragged more deeply into Russia’s war in Ukraine.

Polish President Andrzej Duda said it was “highly probable” that the missile that landed in southeast Poland on Tuesday, killing two people, was fired by Ukraine’s air defense forces rather than Russia. The missile was apparently one of many fired to counter another devastating wave of strikes against Ukraine’s energy sector, which caused blackouts in cities across the country.

The incident had earlier triggered fears that Russia had struck directly at Poland, creating the risk of Poland triggering the activation of NATO’s mutual defense pledges and forcing a direct response by NATO.

The Polish zloty and Hungarian forint rallied strongly on the news, while the euro also rose against the dollar.  

3. Stocks set to open flat; EVs in focus after Mercedes slashes prices; Nvidia due late

U.S. stocks are set to open mixed later after relatively mild producer price inflation data on Tuesday encouraged hopes of a relatively quick end to the Federal Reserve’s interest rate increases.

By 06:20 ET (11:20 GMT), Dow Jones futures, S&P 500 futures and Nasdaq 100 futures were all flat, having risen by between 0.2% and 1.5% on Tuesday.

While earnings from the country’s retailers will grab most of the early attention, there will also be focus on electric vehicle makers after Mercedes Benz (ETR:MBGn) said it would cut its EV prices in China by as much as 33%. Nio (NYSE:NIO) and Xpeng (NYSE:XPEV) ADRs were down over 2% in premarket, while Tesla (NASDAQ:TSLA), which hit a two-year low last week under pressure from CEO Elon Musk’s selling, was flat.

After the bell, Nvidia and Cisco (NASDAQ:CSCO) will round off the day’s action.

4. U.K. inflation hits 11%

Inflation may be on the decline in the U.S., but it’s still going strong in Europe.

The U.K.’s consumer price index rose 11.1% on the year in October, thanks to steep rises in energy and food prices. That’s despite government action to cap household energy bills. Prices were up 2.0% on the month alone.

The numbers, which were above consensus forecasts, complicate the task of Chancellor of the Exchequer Jeremy Hunt as he prepares to announce the government’s tax and spending plans on Thursday. These will now have to incorporate another big rise in servicing the U.K.’s inflation-linked debt, and may have to offer larger pay increases to appease public-sector workers, whose earnings rose only 2% in the year through September.

The pound rose after Hunt signaled that the government wouldn't try to stand in the way of further interest rate hikes from the Bank of England.

5. Oil swings on geopolitical volatility; EIA inventories due

Crude oil prices swung sharply overnight under the influence of geopolitical developments. Having spiked late on Wednesday in response to the news of the missile incident in Poland, they retraced in early trading as the risk of an escalation in Ukraine receded.

However, a drone attack on an Israeli-owned oil tanker off the coast of Oman at the tip of the Arabian peninsula quickly restored the extra risk premium.

By 06:35 ET, U.S. crude prices were up 0.2% at $87.09 a barrel, while brent futures were up 0.2% at $94.09 a barrel.

Weekly U.S. government data on inventories of crude and distillates are due at 10:30 ET.

Retail sales & earnings, Ukraine rocket incident, U.K. CPI - what's moving markets
 

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Comments (9)
Dave Jones
Dave Jones Nov 16, 2022 2:00PM ET
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So because a missile fired by non Russians that killed 2 people is somehow ok now because it wasn't the Russians?
Brad Albright
Brad Albright Nov 16, 2022 2:00PM ET
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Context. Think.
Son Yay
Son Yay Nov 16, 2022 8:27AM ET
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NATO countries are already helping... 🤓
me ish
me ish Nov 16, 2022 8:27AM ET
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it's not like this isn't entirely a proxy war with just rebranding going on - Ukraine in almost every way has the back up of US and UK at least, plus many others
Dave Jones
Dave Jones Nov 16, 2022 8:27AM ET
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me ish re brandon ing more like
znao sam
znao sam Nov 16, 2022 8:25AM ET
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Ukraine is there just to make conflict between NATO and Russia.....
Brad Albright
Brad Albright Nov 16, 2022 8:25AM ET
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Oh, that why Ukraine is there? Thanks for the masterful insight.
Hilyassa Ongoïba
Hilyassa Ongoïba Nov 16, 2022 8:22AM ET
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ilyassa Ongoïba
Jeffrey Wu
Jeffrey Wu Nov 16, 2022 8:21AM ET
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This is going to be a long occupation for russia, it took the us 40 years to get out of the middle east. This war is not likely a short one. I think ukraine is losing the war slowly and wants nato to help them. "Missle from ukraine"
Francis Dagostino
Francis Dagostino Nov 16, 2022 7:59AM ET
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The aim of Ukraine is to create conflict between mother Russia and EU. Europeans will soon find out what a BIG mistake they`ve done arming Ukraine with missiles against Russia.
Mike Wellons
Mike Wellons Nov 16, 2022 7:59AM ET
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Thats it? Thats your comment? Russia continuously murdering civilians and your complaint is EU has done wrong arming Ukraine with missiles that can only reach Russian murderers illegally in Ukraine territory?
Glen Vachovski
Glen Vachovski Nov 16, 2022 7:59AM ET
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Mike Wellons do not pretend that you care…funding this bloodshed without direct involvement will lead to more casualties and inevitable loss for ukranians.
Brad Albright
Brad Albright Nov 16, 2022 7:59AM ET
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@Mike. Of course you are right, but you make a moral appeal to people who have no morals.
Matt Kay
Matt Kay Nov 16, 2022 7:59AM ET
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russian bot spreading propaganda. block and report
David Cook
David Cook Nov 16, 2022 7:34AM ET
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It was reading some hearsay about the S-500 rocket that exploded on Polish soil. The commenters were referencing the limitations in range and how any Russian forces were roughly double the distance from said range it was fired from. So the ONLY place that could have sent said missile was Ukraine. The west wants to find a reason to escalate this conflict it seems..
me ish
me ish Nov 16, 2022 7:34AM ET
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even Biden said this morning that the rocket was almost certainly from Ukraine air defence - woophs - bit of a mistake!
me ish
me ish Nov 16, 2022 7:34AM ET
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more to the point, it was either UK and/or US that blew up nordstream 2 pipeline - the ramifications of that are huge
NVDA slaveBOI
NVDA slaveBOI Nov 16, 2022 7:29AM ET
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well, that's one way to spin the Poland missile story. I guess it was the best story.... it was Ukraine missle... lolol.. ok.
vikas Chaudhary
vikas Chaudhary Nov 16, 2022 7:16AM ET
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adani
 
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