Weak US retail sales dampen to the market mood

The FTSE is opening on the back foot after a lower close on Wall Street following weaker US retail sales.

Charts (2)

The FTSE is opening on the back foot after a lower close on Wall Street following weaker US retail sales. Signs that resurging covid cases and the lack of fiscal stimulus is impacting on the US consumer was enough of an excuse for vaccine optimism to fade and stocks to drift lower.

US retail sales rose just 0.3% versus 0.5% expected in October compared to the previous month. This was significantly lower than the 1.6% month on month increase seen in September and served as a stark reminder if it was needed that there will be a lot of economic fallout from the pandemic over the coming months before any vaccine is widely available.

The FTSE underperformed its European peers in the previous session and is heading in the same direction this morning owing to a stronger Pound. Given the high number of multinationals on the FTSE, a stronger pound is a less beneficial exchange rate for those earning abroad.

UK inflation lifts GBP
UK inflation picked up by more than expected in October even as large parts of the country headed back into lockdown. CPI rose 0.7% YoY and 0% MoM beating forecasts of -0.1%. Whilst food, furniture and clothes saw prices rise as summer sales items were replaced by full priced autumn ranges, unsurprisingly leisure activities and transport negatively impacted price growth.

The Pound is building on gains from the previous session as Brexit optimism remains a firm support of Sterling. As talks continue between the EU and the UK and rumours swirl that a deal could be ready as soon as Monday or Tuesday next week.

Oil gains capped on OPEC indecision
Oil is holding steady on Wednesday after API data late on Tuesday showed that US crude stockpiles rose by 4.2 million barrels last week, significantly ahead of expectations of 1.7 million barrels. The data came after OPEC+ meeting where no formal agreement was made to reverse its plan to boost output by 2 million barrels a day in January, ahead of a full OPEC meeting at the end of the month. This could cap any gains in oil. The last thing the oil market needs in this lockdown winter will be 2 million more barrels a day of supply. 

FTSE Chart


More from FTSE 100

From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.