FTSE Set For A Softer Start Despite Retail Sales Surging
Fiona Cincotta July 24, 2020 2:17 AM
Concerns over the US economy and US-Sino relations are overshadowing soaring UK retail sales
Concerns over the economic recovery in the US and raising US – Sino tensions are dragging on investor sentiment at the end of the week. European bourses are heading for a weaker start on the open despite UK retail sales soaring.
Concerns over the economic recovery in the US are weighing on risk sentiment. Data yesterday showed that the US labour market recovery was stalling as the US struggles to get control of the coronavirus outbreak. The number people signing up for unemployment benefits saw a weekly increase to 1.4 million, up from 1.3 million. The weekly increase comes as parts of California and the sunbelt re-impose lockdown measures in an attempt to slow the spread of the virus.
Adding to the risk adverse mood, China ordered the closure of the US consulate in Chengdu, in a tit for tat move following the shutting of the Chinese consulate in Houston. Fears are growing over the stability of the Phase 1 trade deal.
UK retail sales surged in June, smashing expectations. Sales jumped 13.9% mom, adding to May’s 12% surge. This was well ahead of expectations for an 8% increase. The data shows that as lockdown measures eased and non-essential shops opened in the middle of the month, consumers were ready to spend. This is a very encouraging reading and boosts optimism surrounding a V-shaped recovery. However, as the government withdraws its support from the labour market, retail sales could quickly fall away. The Pound has lifted off session low and moved into positive territory at $1.2745.
PMI’s up next
Looking ahead PMI data will be in focus across the regions. The UK data is expected to be upbeat showing that activity in both the dominant service sector and the manufacturing sector expanded in July. If strong enough the numbers could boost optimism further surrounding a V-shaped recovery. Eurozone and US PMI data is expected to be similarly upbeat.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.