Europe
A mixed set of economic data as well as rising in tension between the west and Russia sent European shares lower on Tuesday. The suspicious death of Putin-critic Boris Nemtsov together with US plans to train Ukrainian troops to fight Russian-backed rebels has the whiff of the Cold War about it.
Eurozone producer price inflation fell -3.4% year-over-year, the fastest since November 2009. The fall in wholesale prices suggests that the Eurozone is far from having escaped its deflationary trap. The slight slowdown in consumer price deflation in January may turn out to just be a bump in the road if the PPI is anything to go by.
German retail sales increased much faster than expected at 5.3% year-over year. The German consumer remains resilient backed up by record low unemployment and a strong housing market.
UK
A string of missed earnings reports left UK shares lower on Tuesday offsetting data suggesting strength in the construction sector. The construction PMI increased to 60.1 against expectations of a small dip to 59.0 from 59.1 previously.
The FTSE 100 backed off from all-time highs as worries China may reduce its annual growth target this week hit mining companies with Barclays (LONDON:BARC) one of the top fallers after disappointing investors in its full-year earnings report.
Shares in Barclays dropped after the bank reported an annual net loss having put aside an extra £750m for FX rigging fines and £200m for insurance mis-selling. Excluding exceptional costs Barclays turned a profit but the underlying business cannot come to the fore with no end in sight for litigation.
Lower commodity prices have forced Glencore Xstrata Plc (LONDON:GLEN) into a £715m write-down, hurting full-year profits and sending shares lower. Fresnillo (LONDON:FRES) and Randgold Resources (LONDON:RRS) fell in sympathy, not aided by the drop in copper prices ahead of Chinese data this week.
US
A slowdown in the pace of auto sales in January alongside sliding oil prices sent US stocks into the red on the open on Tuesday.
Supported by the strength of car sales in the US, AutoZone Inc (NYSE:AZO) beat quarterly earnings estimates on the top and bottom line, sending shares higher.
Best Buy Co Inc (NYSE:BBY) beat quarterly profit forecasts but missed on revenues. Shares traded higher because the electronics retailer announced a special dividend of 51c per share and increased its regular quarterly dividend by 21%.
Shares in Ford Motor Company (NYSE:F) dropped after missing auto sales estimates; light-vehicle sales dropped 2% against expectations of a rise of 5.8%
General Motors Company (NYSE:GM) traded essentially unchanged after announcing February auto sales up 4.2%, slightly lower than the 5.9% consensus.
FX
The US dollar was mostly weaker on Tuesday on a lack of economic data with the Australian dollar the standout gainer after the Reserve Bank of Australia surprised markets by not cutting interest rates at its monthly meeting.
AUD/USD retook 0.78 on the news of the RBA staying put on rates but a break above 0.80 seems unlikely with the distinct possibility the central bank may decide to cut again next month.
USD/JPY again dropped away from the 120 level after a Japanese government advisor to Prime Minister Abe warned against an over-heating of the economy as a result of overly aggressive BOJ monetary easing.
Commodities
Having dropped early on, Goldfound more buyers at $1200 per oz sending the precious metal higher again amidst a weak USD.
The price of Copper dropped ahead of the China HSBC services PMI on Wednesday and a possible downgrade to China’s growth target on Thursday.
Oil prices rose after dropping heavily on Monday in the context of more news of capital spending cuts, this time from Anadarko Petroleum. WTI is under-performing Brent ahead of the latest crude stocks data on Wednesday expected to show another increase after last week’s record stockpile of US oil.
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