Friday is expected to see retail sales and industrial production data for April along with a key study of consumer sentiment from the University of Michigan. The stock declined in anticipation of the data release. Chinese factories are coming back on track, but consumers are not yet daring to spend much. The House of Representatives today may vote for a new $3 trillion economic support package offered by Democrats, while gold and silver continue their rally along with the oil market, which is overcoming the fear of an imbalance between supply and demand. This is what you need to know about financial markets on Friday, May 15.
- retail sales are expected to fall in the U.S.
The stock market has survived another week of rising unemployment, now it has to survive a record fall in retail sales.
The April data, which is expected at 08:30 EST (12:30 UTC), should show a 12% decline compared to March and is the biggest monthly decline ever.
Industrial production and finished goods data are expected at 09:15am EST (13:15am GMT). They are expected to fall by 11.5% and 13%, respectively.
The Empire State Manufacturing Index will be released at 08:30 AM Eastern Time (12:30 UTC) and the University of Michigan Consumer Sentiment Index at 10:00 AM Eastern Time (14:00 UTC).
- Chinese factories have resumed operations, but consumers are not yet in a hurry to spend
Productivity in China is recovering faster than consumer activity: for the first time since the beginning of the pandemic, industrial production there has grown at an annual rate of 3.9% above the expected 1.5%. Nevertheless, production has been 4.9 percent lower since the beginning of the year, an unprecedented decline.
The industrial production data were the only positive developments in these countries, where retail sales fell by 7.5% YoY, far below expectations, while fixed investment fell by 10.3% YoY, slightly worse than expected.
China’s securities market fell 0.4%, while the CSI 300 index stayed flat.
- The securities market will open up with a decline
American stock indices are going down. At 07:25 EST (1110 GMT), S & P 500 futures traded 19 pips, or 0.7% lower, while Nasdaq futures fell 64 pips, or 0.7%. Futures contract on Dow fell 163 points, also a 0.7% drop. It is likely to be the worst week for the stock in two months.
The market is ending the week amid fears of new waves of coronavirus infection at home and abroad as well as a new round of confrontation between America and China.
Futures on crude oil had a more pronounced positive trend: American WTI grew by 2.0% to $28.09, while the international benchmark for Brent rose by 2.2% to $31.80, as increased signs of equilibrium recovery in the market strengthened confidence that the May futures contract will expire more smoothly than in April.
- House of Representatives may vote for new stimulus package proposed by Democrats
Later on Friday, the U.S. House of Representatives may proceed to vote on a new $3 trillion bill to support the economy, although comments from the Senate and the presidential administration suggest that there is little chance of a bill in its current form.
The so-called Health Emergency Relief and Economic Recovery Bill (HEROES) will expand unemployment assistance, increase food stamps and expand emergency benefits for small businesses.
- Gold and silver retain their high status as long as faith in other assets fades away.
One type of government spending money on the Coronavirus pandemic worldwide continues to support prices for precious metals.
Gold futures reached a three-week high and consolidated within the 8-year high they set last month at $1740.75 per troy ounce. Silver futures meanwhile reached a two-month high at $16.64 per ounce.
The yields on U.S. Treasuries are not yet an argument in favor of the depreciation of the U.S. currency: it has not changed in general and is a couple of basis points behind the historic lows it set earlier this month, which is confirmed by the belief that under the influence of the virus it is waiting for deflation before inflation.