Daily Market Update 14 May 2013 - US retail sales beat, on to the budget
US retail sales rose more-than-expected in April with an increase of +0.1% reported<http://www.census.gov/retail/marts/www/marts_current.pdf>. The result was an improvement on the downwardly-revised -0.5% decline of March and far stronger than the +0.3% fall expected by economists. Adding to the result, ‘core’ sales, those excluding lumpy items such as autos and fuel, rose by +0.6%, well above the flat reading previously recorded in March.
US business inventories held flat in March, defying economist expectations for a rise of 0.3%. The result was the same as the upwardly-revised reading of February and suggests new orders will rebound shortly should the expected pickup in the economy occur.
Swiss retail sales fell unexpectedly in the year to March with a fall of 0.9% recorded. Even taking into account the high baseline effect, the result was considerably below the 0.8% rise that had been expected by the markets.
Indian consumer prices continued to ease in the year to April with the government reporting a decrease to 9.39%. The result was below both the 10.39% rate of March and expectations for a fall to 9.83%. Elsewhere the national trade deficit ballooned in April with the amount blowing out to $17.8b. The figure was considerably above the $10.32b deficit of March with a 1.6% annual rise in exports trumped by a huge 10.9% lift in imports on the back of surging precious metals demand.
The Day Ahead (All times AEST)
The ASX 200 looks set to open firmer this morning with SPI futures pointing to a rise of 17pts on the open. While the futures market is optimistic, given the lacklustre lead from Wall St, mixed commodity prices, caution before tonight’s Federal Budget and continued selling pressure above the 5,200 point level, it wouldn’t surprise to see our market finish closer to flat in the absence of a sharp move in Chinese equities.
As it has been for most of last week, the Aussie Dollar remained the ‘whipping boy’ of global forex markets overnight with the currency falling to .9941 against the USD, the lowest level seen since June 14, 2012. While the price action is unequivocally bearish, given the USDJPY’s inability to the 102 level, something that has inversely correlated with the AUDUSD’s recent decline, and the fact the currency is oversold on a technical basis, there is a growing risk that we will see a near-term retracement on the back of short-covering. What that catalyst may be – the Federal Budget, weakness in US data, talk from FOMC committee members, stronger local data or even an article from a noted Fed-watcher is yet to be determined. Support starts at .9941, .9900 and again at .9850 with resistance kicking in at .998 and again above parity.
A quiet economic data calendar in Asia with New Zealand retail sales, Indian WPI and the RICS house price survey from the UK the only releases of note.
Australian Treasurer Wayne Swan hands down the 2013/14 Federal budget at 7.30pm this evening. While we already know many of the key announcements, for those who do not wish to sit through the entire Parliamentary address, we’ll tweet the key facts and figures, along with any surprises, once the document hits the screens.
Economic data releases this evening include inflation readings from Germany, Spain and Italy, Eurozone industrial production, the ZEW survey from Germany along with import/export prices from the States.