* European shares fall
* STOXX 600 still set for weekly gains
* Industrial, real estate stocks among biggest gainers
* Swiss blue-chips on course for 14th straight day of gains
June 18 - Welcome to the home for real-time coverage of
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WANTED: UK PENT-UP DEMAND (1030 GMT)
British retail sales fell quite unexpectedly in May leaving
economists scratching their heads wondering where is the much
anticipated pent-up demand as most of the COVID-19 restrictions
were lifted in the UK.
As people preferred to spend in restaurants and bars rather
than shops, retail sales fell 1.4% from April to May.
Quite a descent size miss considering that a Reuters poll of
economists had pointed to an 1.6% month-on-month increase.
"Certainly there is a suggestion that consumer spending is
struggling to grow... which raises the question of exactly where
the pent-up demand that was seen as driving the UK recovery is?”
says Stuart Cole at Equiti.
“Going forward, rising inflation plus the ending of the
jobs furlough scheme and other government support measures
end-Q3, look set to erode consumer spending power even further,
while the on-going re-opening of the services sector will
continue to take a larger slice of spending," he forecasts.
(Joice Alves)
*****
EUROPE'S SHARES ON TRACK FOR FIFTH WEEKLY GAIN (0539 GMT)
European shares are flat but enough to be on track for a
fifth consecutive weekly gain amid dovish signals from the
European Central Bank and optimism over a recovery.
Even with inflation rising in the euro zone, the European
Central Bank has struck a different tone on policy than the
U.S., saying last week that it was too early to debate closing
the money taps.
The pan-European STOXX 600 index was flat, with
industrials and travel and leisure shares
leading the gains.
While mining stocks took some shine off the index, tracking
a slide in commodity prices following a hawkish policy outlook
from the Fed this week.
In terms of single stocks, mid cap car dealer Inchcape
is the best performer, with shares up 6% after the
company raised its 2021 outlook.
(Joice Alves)
*****
TAPER TANTRUM'S DRESS REHEARSAL (0651 GMT)
At least we know what to expect!
The Federal Reserve's hawkish turn on Wednesday provided
global financial markets with a taste of what they might expect
when the U.S. central bank actually announces the tapering of
its massive bond-buying programme.
It's fair to say that price action across asset classes,
already fading, was limited in comparison to the taper tantrum
of 2013 -- particularly as Fed bond-buying will remain huge for
some time yet -- but it still ticked a lot of boxes.
Government bond yields: check! The cost of borrowing rose,
particularly for short term loans with the yield for the
benchmark 2-year notes jumping from 0.16% to about
0.21% at the time of writing.
In the grand scheme of things though, 1.51% for 10-year
Treasury bonds on Friday morning doesn't suggest
fixed income markets are panicking about the slow end of
stimulus just yet.
Dollar king: check! The dollar index soared to more
than two-month highs following the Fed meeting and is on course
for its best week since last September.
With other major central banks showing no rush to tighten
like the Bank of Japan or the European Central Bank, dollar
bears will think twice before doubling down.
Commodity prices hit: check! Gold is set for its worst week
since March 2020, while copper and oil, which are mostly traded
in dollars, took a beating from the rising greenback.
Global stock markets now seem to have made their piece with
the Fed projecting an initial interest rate hike in 2023 and
possibly starting to reduce its monetary support in 2022.
While MSCI's broadest index of Asia-Pacific shares outside
Japan slipped 0.1% futures for European stocks
are flat and slightly positive for Wall Street.
U.S. data on Thursday showed growing factory activity and an
easing in layoffs, keeping the hopes of a robust economy well
alive.
Key developments that should provide more direction to
markets on Friday:
- Spain's Acciona seeks $11.6 bln valuation with renewables
IPO
- UK retail sales fell 1.4% between April and May
- Tesco's UK sales growth slows in latest quarter
-BOJ to launch new scheme for fighting climate change, keeps
policy steady
-Japan's core consumer prices grew slightly to post their
first rise in more than a year in May
- ECB Vice President Luis de Guindos at ECOFIN meeting
(Julien Ponthus)
*****
EUROPE SEEN OPENING FLAT, FED EXCITEMENT FADES (0524 GMT)
European futures are roughly flat this morning and it's fair
to say that most of the market price action triggered by the
Fed's sudden hawkish turn is fading away.
Over on Wall Street futures are slightly positive while
MSCI's broadest index of Asia-Pacific shares outside Japan lost
0.2%.
All in all, European stocks are on course for a fifth
straight week of gains, even if quite modest at 0.4%.
At just one point of the last record high reached on Monday,
it's fair to say the Fed's change of tone has proved to be no
game changer for the STOXX 600 so far.
(Julien Ponthus)
*****
Inchcape (INCH)
