Stocks are breathing a sigh of relief after an anxious few days of waiting, now that the major events are out of the way. Wall Street had one of its better days in weeks after a decent retail sales report and a “dovish” hike from the ECB.
- China’s economy picks up in August: Chinese industrial production and retail sales in August exceeded expectations, boosting sentiment in Asia. Chinese stocks experienced significant gains, following a strong close on Wall Street the previous day.
- US economy remained resilient: US sales report did not fully match headline gains, reinforcing expectations of a soft landing.
- The ECB stance further strengthened the belief that the FED might be finished with rate hikes or have only one more planned for later in the year.
- Treasury yields saw fluctuations during the session but ultimately ended higher, partly due to improved risk sentiment and lingering concerns about inflation, particularly in light of the hotter Producer Price Index (PPI) and high energy prices.
- The ECB’s dovish signal led to a rally in European stock indexes, which continued into the following day.
- FX – USDIndex steady at 104.82. EURUSD is slightly higher after it slumped to a low of 1.061 from 1.0755, whille GBPUSD slid to 1.2397, both the weakest since March.
- Stocks – The US30 climbed 0.96% with several of the sectors rallying over 1%. The US500 was up 0.84% and managed to close back over the 4500 level at 4505. The US100 rose 0.81%. the CSI300 corrected slightly, despite better than expected industrial production and retail sales numbers ASX and JPN225 outperformed while GER40 and UK100 up 0.6%.
- Commodities – Oil spiked above $90, heading its their 3rd consecutive weekly gain as expectations for tight supply outweighed fears over an economic slowdown.
Today: US Industrial Production, Empire state Index & Prelim UoM Consumer Sentiment.
Key Movers: AUDJPY (+0.44%) up for 6-consecutive days, retesting the upper trendline of 2-month range.
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Andria Pichidi
Market Analyst
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