Market news

Bloomberg.com — U.K. retailers made a faltering start to the fourth quarter as sales unexpectedly fell for a second month in October.

The volume of goods sold in stores and online declined 0.5 percent from September, the Office for National Statistics said Thursday. The median forecast in a Bloomberg survey was for a 0.2 percent gain.

Key Insights

• Decline was largest in seven months and followed a 0.4 percent drop in September
• Retail sales excluding auto fuel fell 0.4 percent. Sales of household goods dropped 3 percent, clothing sales were down 1 percent and sales at “other” stores, a category that includes pharmacies, booksellers and computer shops, fell 1.4 percent
• Mild weather hit winter clothing sales and household goods had done well in previous two months. Decline in sales was partly offset by spending at department stores and food sales, which rose 0.4 percent in a rebound from a weak September
• The pressure on consumers is easing, with pay growth now running comfortably ahead of inflation. But real pay remains well below its level before the financial crisis and fears that Britain could crash out of the European Union without a deal are mounting
• Internet retailing is taking a heavy toll on traditional bricks-and-mortar stores. The amount of money spent online has risen sixfold over the past decade and accounted for 18 percent of total sales in October

Bloomberg.com — U.S. equity futures rose alongside stocks in Europe and Asia on Thursday after Federal Reserve Chairman Jerome Powell painted an upbeat picture of the world’s biggest economy and the U.K. moved into the next phase of its Brexit saga. Emerging-market assets rebounded and oil stabilized.

Contracts for the S&P 500 Index swung between gains and losses for most of the morning following another downbeat session in New York on Wednesday, but they gathered momentum ahead of the European open. Miners led the way as the Stoxx Europe 600 Index climbed, though the gauge remains down on the week. Japanese stocks edged lower, while Hong Kong shares jumped after Tencent Holdings Ltd. earnings beat expectations. Chinese equities outperformed as reports indicated officials have outlined a series of potential concessions to the Trump administration for the first time since the summer.

For all the worries assailing global markets — from trade tensions and politics to Brexit and the Italian budget — investors are at least receiving a steady message from the U.S. central bank. In a question-and-answer session late on Wednesday Powell played down recent turbulence in equities, saying volatility was only one of many factors that the Fed takes into account. Policy makers have raised interest rates three times this year and a fourth increase is projected for next month.

Elsewhere, the pound fluctuated after U.K. Prime Minister Theresa May secured backing from her cabinet for a withdrawal agreement with the EU, though doubts remain on her ability to secure Parliament’s backing — and even to survive as leader. Gilts rose and the FTSE 100 Index advanced.

Meanwhile, the Australian dollar climbed after a strong local jobs report. West Texas crude drifted following Wednesday’s rebound from a record losing streak.

Bloomberg.com — […] Inflation measured by the the Fed’s preferred gauge of price pressures known as the personal consumption expenditure index was 2 percent — at the central bank’s target — in the 12 months through September after running mostly below that threshold since 2012. A separate gauge, the consumer-price index, rose 2.5 percent in October from the year before, according to a Labor Department report Wednesday.

Unemployment has falling to 3.7 percent, the lowest level since 1969, and average hourly earnings are creeping up.

Greenspan said a lack of productivity growth meant “you’re getting into a system now which has no outcome that’s in equilibrium other than inflation and no productivity growth.” […]

Bloomberg.com — An anticipated pickup in U.K. inflation failed to materialize last month as food, clothing and transport prices declined.

Annual consumer-price growth stayed at 2.4 percent in October, the Office for National Statistics said on Wednesday. The figure is below the 2.5 percent predicted by both the Bank of England and economists in a Bloomberg survey.

Food and non-alcoholic drink prices fell 0.2 percent from September, clothing and footwear declined 0.5 percent and the cost of transport equipment and services was down 0.4 percent. These effects were offset by the highest auto-fuel costs in almost four years and a 2.2 percent jump in energy bills after British Gas hiked tariffs for more than 3 million customers.

The pound was little changed after the figures at $1.2963, down 0.1 percent on the day.

BOE policy makers say gradual interest-rate increases will be needed to keep inflation falling toward its 2 percent target, assuming Britain avoids a disorderly Brexit.

Expectations that officials will tighten policy after Britain leaves the European Union next year were reinforced by figures Tuesday showing wages growing at their fastest pace in almost a decade, a sign that home-grown prices pressure are building. […]

Bloomberg.com — Stocks in Asia seesawed Wednesday after a mixed bag of data on China’s economy that followed a topsy-turvy session for U.S. shares. Oil extended its rout, while the pound stabilized after its recent bounce.

Japanese stocks came off their highs of the day, while shares declined in Hong Kong, China and South Korea. Australian equities underperformed, as energy producers weighed. European futures pointed to a weaker open. Earlier, U.S. equities ended lower as optimism over trade talks with China was offset by the plunging crude price, which dropped more than 7 percent Tuesday. The pound maintained gains amid optimism the U.K. and the European Union have agreed upon a draft Brexit divorce deal. Treasury yields were flat and the dollar remained near an 18-month high.

Risk appetite had built Tuesday morning in the U.S. after White House economic adviser Larry Kudlow told CNBC that the U.S. and China are talking on “all levels” of government. That followed an overnight report that China’s Vice Premier Liu He will pave the way for a meeting between the leaders of the two biggest economies later this month. Meanwhile, the Trump administration was said to be holding off for now on imposing new tariffs on automobile imports.

Focus now turns to Federal Reserve Chair Jerome Powell who speaks Wednesday, with some observers expecting him to calm worries about the central bank pushing its interest rate-hike cycle too far. That comes after the latest read on China’s economy, where retail sales missed estimates, though industrial production held up.

Italian assets are back in focus after its government stuck to forecasts for a 2.4 percent budget deficit and 1.5 percent growth target for next year. The move pushes aside attempts by Finance Minister Giovanni Tria to placate the European Commission, which had demanded changes to ease concerns about excessive spending and overly optimistic growth estimates.

Elsewhere, India’s rupee rallied to an almost two-month high and sovereign bonds advanced as the slump in oil prices deepened, easing investor concerns over the oil-importing nation’s current-account deficit. The pound extended gains following a report that key ministers will back U.K. Prime Minister Theresa May’s draft Brexit agreement after months of negotiations.

Bloomberg.com — U.K. wage growth accelerated to a near 10-year high, backing the Bank of England’s view that there is now no spare capacity in the labor market.

Average earnings excluding bonuses rose 3.2 percent in the three months through September from a year earlier, the most since December 2008, the Office for National Statistics said Tuesday. Unemployment unexpectedly rose from a 43-year low to 4.1 percent. […]

Bloomberg.com — Asian stocks traded lower Tuesday following a tech-led slump on Wall Street overnight though the worst of the losses were pared on hopes for progress in the U.S.-China trade dispute. Treasury yields dropped and the dollar slipped from an 18-month high.

Key indexes slid from Tokyo and Seoul to Sydney, with Apple Inc. suppliers under pressure after the iPhone maker fell 5 percent on signs of a deteriorating sales outlook. Stocks came off their lows on a report that China’s Vice Premier Liu He will visit the U.S. to pave the way for a meeting between the leaders of the two biggest economies later this month, which also supported some currencies.

Hopes of a resumption in trade talks helped Chinese shares swing from declines of more than one percent to gains of a similar magnitude with small-caps boosted by government pledges to support the private sector. Hong Kong stocks erased a slide. S&P 500 Index futures pushed higher and U.K. futures tipped modest gains at the open. Earlier, the Nasdaq 100 Index dropped for a third day and the Russell 2000 small-cap benchmark erased its gains for the year. Oil fell for a record 12th straight day Tuesday.

The latest warning on consumer appetite for electronics came from Lumentum Holdings Inc., an Apple supplier that said a top customer asked to “meaningfully reduce shipments” for previously placed orders. Deteriorating sentiment towards tech has hit the sector that had propelled American stock gains until October. Trade-war worries are also rising, with the White House circulating a draft report on auto tariffs.

In the background is a Federal Reserve that continues on its path of policy normalization. San Francisco Fed President Mary Daly indicated Monday that she isn’t worried about recent declines in stocks. A “broad consensus” had agreed that “valuations were higher than could be supported,” she said. “So then a correction is something that I would view as a positive.” The Fed is forecast to hike interest rates again next month.

“We always talk about that proverbial wall of worry and that wall right now is pretty high,” David Kudla, chief executive officer of Mainstay Capital Management, said on Bloomberg TV. “We have the issues in China with the growth concerns there, we have the issues in Europe with the battle between the Italy and the EU, the U.K. getting ready for Brexit. There is some guidance lower on earnings, and a Federal Reserve that is going to raise rates.”

The Australian and New Zealand dollars climbed on the reports that the U.S. and China are inching closer toward resolving the trade war. China and the U.S. will find a solution to their differences over trade that meets both countries’ common interests, Chinese Premier Li Keqiang said in Singapore Tuesday. The yen, a proxy in times of uncertainty, swung to a loss.

Elsewhere, Britain’s pound pared losses from the past three days as pressure builds on U.K. Prime Minister Theresa May to ditch her Brexit plan. The euro recovered from its weakest against the dollar since June 2017 ahead of more potential stress around Italy’s budget.

Bloomberg.com — Stocks were mixed in Asia and futures pointed to a firm start for equity markets in London and New York as investors assessed whether the recent rallies can endure. The pound slid as U.K. Prime Minister Theresa May fought to keep her Brexit divorce plan alive.

Shares drifted for most of the Asian day, with equities in Japan and Hong Kong little changed, while they gained in China. The region’s stocks shrugged off leads from a weak U.S. session on Friday when large-cap tech stocks dragged the Nasdaq 100 Index to a loss of more than 1.5 percent. Oil prices snapped a 10-day sell-off after the bear market for crude spurred OPEC and its allies to start laying the groundwork to cut supply in 2019. Yields on 10-year Treasuries, which don’t trade Monday thanks to a U.S. holiday, ended just below 3.2 percent on Friday.

China’s economy will be in focus this week, with key monthly data due Wednesday. Chinese stocks showed signs of rebounding Monday morning after tumbling last week amid mounting signs of a slowdown, seen in earnings outlooks and moves by regulators to sustain credit flows. While Alibaba Group Holding Ltd. logged another record in its Singles’ Day online-sales extravaganza, that may not be enough to shift sentiment.

“Clearly there’s a deceleration due to the soft macro” picture for the economy, Junheng Li, founder of JL Warren Capital LLC in New York said in reference to Singles’ Day. “But where we can get some comfort from this number is that Chinese consumers are slowing, not collapsing.”

Global stocks are facing pressure again, from China and worries that the most recent earnings season could prove to be a peak. There’s also a renewed debate on the direction of bond yields, with investors dialing down inflation expectations. U.S. consumer prices due this week may offer further hints on the trajectory of costs.

“The relative valuations that we’re seeing across a number of equity markets around the world, compared to what we think the bond market is going to do, does suggest an overweight in global equities makes sense,” said Andrew Milligan, head of global strategy at Aberdeen Standard Investments, which oversees $735.5 billion for clients. “But that does require there to be no big policy errors” from central banks, he told Bloomberg TV in Hong Kong.

Elsewhere, the offshore yuan held on to last week’s drop, with little sign of an end to the U.S.-China trade war in the wake of the midterm elections.

Bloomberg.com — Stocks in Asia retreated Friday amid growing concerns about a slowdown in China and policy makers’ steps to address it. The dollar held gains from overnight, when the Federal Reserve reinforced expectations for further interest-rate hikes. Treasury yields edged lower.

Equities in Hong Kong and China led losses in the region, with financial shares doing particularly poorly following news that Beijing plans to set quotas for banks to pump credit into private companies — a heavy-handed move that some fear will boost non-performing loans. Softer Chinese producer-price gains, weak car sales and a disappointing outlook from a top online travel company rounded out the bad news. Energy shares in Asia also tumbled after crude oil entered a bear market. The negative sentiment looked set to spill over to European trading, where equity futures pointed to modest losses.

Investors had largely anticipated the Fed wouldn’t change rates on Thursday and were more focused on looking for any signals on the pace of policy tightening into 2019. The central bank said “economic activity has been rising at a strong rate” and job gains “have been strong,” acknowledging a drop in the unemployment rate, while repeating its outlook for “further gradual” rate increases in its statement.

Meanwhile, the offshore yuan held this week’s drop, amid little sign of an end to the U.S.-China war in the wake of the midterm elections. The pound softened amid ongoing speculation over a potential deal on Brexit. Emerging market currencies slid, with the Korean won, Indonesian rupiah and Philippine peso all lower amid strength in the greenback.