Disappointing industrial data from China looks like sending US markets lower at the open, building on a late reversal on Thursday that saw the Dow Jones slip over 150 points from gains made after retail sales data improved in November as chances of a US government shutdown increased.
The government shutdown has been averted though with the house passing a last-minute spending bill which will offer some relief to markets and minimise what could have been huge political risk.
An annual decline in Black Friday sales in the US had diminished hopes that the consumer had been revived by lower prices at the pump before the holiday shopping season. The strength in the November retail sales as well as the decade high auto sales suggests the Black Friday showing was driven by shopping habits shifting online rather than a weak consumer.
Lower oil prices are just like a tax-cut for consumers so the expectation is that some of that wealth affect will be spent. There is typically a lag between when petrol prices fall to when people start to feel richer; November’s retail sales is the first major sign that the oil price declines from June are having an impact.
Retailers were some of the biggest gainers yesterday with Urban Outfitters Inc (NASDAQ:URBN) rallying over 7% and Staples Inc (NASDAQ:SPLS) and Office Depot Inc (NASDAQ:ODP) getting a double lift from an activist investor stake in both possibly paving the way for a merger of the two office supply giants.
The trouble is that when markets are largely driven by liquidity, the good news about the US economy is decreasing the timetable for how long that liquidity will last. Whether the good unemployment, wage and retail sales data has impacted Fed timing for a rate-hike will be indicated next week in its decision whether to remove the “considerable time” language from its statement.
Futures suggest the:
S&P 500 will open 5 points lower at 2,030 with the
Dow Jones expected to open 35 points lower at 17,561 and the
NASDAQ Composite 13 points lower at 4,233.
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