US retail sales excluding auto lift world stocks
Wednesday, May 14, 2008
WORLD stocks edged higher while the US dollar rose across the board yesterday after stronger-than-expected US retail sales outside the auto sector showed resilience in the world's biggest economy.
UK stocks and sterling fell after data showing a jump in inflation, a weakening housing market and soft retail sales reinforced gloom about the domestic economy.
Retail sales excluding autos rose a higher-than-expected 0.5 per cent in April after a 0.4 per cent increase in the previous month. This has cut the chances of a quarter-point cut in US interest rates in June to only 10 per cent.
"Excluding autos, the report was pretty decent. And that's good because it doesn't point to recession. The consumer is still out there spending," said Kurt Karl, chief US economist at Swiss Re in New York.
The FTSEurofirst 300 index was up 0.2 per cent while the MSCI main world equity index was up 0.1 per cent on the day, having hit a four-month peak last week.
The US dollar was up 0.5 per cent against major currencies.
Federal Reserve chairman Ben Bernanke said emergency Fed liquidity measures have helped relieve strain in financial markets but the recovery process remains incomplete.
Sterling was one of the biggest losers in the session, falling half a per cent on the trade-weighted index and also against the US dollar to US$1.9478, approaching Monday's 2-1/2 month low.
Soaring food and fuel bills pushed up Britain's inflation rate by its biggest amount in nearly six years, denting expectations of growth-boosting interest rate cuts.
At the same time, surveys cemented the view that the UK economy was losing momentum. House prices fell in every region of Britain in April with surveyors reporting the widest margin of decline in at least 30 years. Retail sales values fell for a second consecutive month in April.
"The concern is we are now about to enter a period of high inflation and much slower growth," said Jeremy Batstone-Carr, head of private client research at Charles Stanley.
"But obviously, by not cutting interest rates any more, the risk is that the UK economy goes through a period of even slower growth and possibly flirts with recession."
Asian shares rose 0.6 per cent, while Chinese shares fell 1.8 per cent.Reuters
UK stocks and sterling fell after data showing a jump in inflation, a weakening housing market and soft retail sales reinforced gloom about the domestic economy.
Retail sales excluding autos rose a higher-than-expected 0.5 per cent in April after a 0.4 per cent increase in the previous month. This has cut the chances of a quarter-point cut in US interest rates in June to only 10 per cent.
"Excluding autos, the report was pretty decent. And that's good because it doesn't point to recession. The consumer is still out there spending," said Kurt Karl, chief US economist at Swiss Re in New York.
The FTSEurofirst 300 index was up 0.2 per cent while the MSCI main world equity index was up 0.1 per cent on the day, having hit a four-month peak last week.
The US dollar was up 0.5 per cent against major currencies.
Federal Reserve chairman Ben Bernanke said emergency Fed liquidity measures have helped relieve strain in financial markets but the recovery process remains incomplete.
Sterling was one of the biggest losers in the session, falling half a per cent on the trade-weighted index and also against the US dollar to US$1.9478, approaching Monday's 2-1/2 month low.
Soaring food and fuel bills pushed up Britain's inflation rate by its biggest amount in nearly six years, denting expectations of growth-boosting interest rate cuts.
At the same time, surveys cemented the view that the UK economy was losing momentum. House prices fell in every region of Britain in April with surveyors reporting the widest margin of decline in at least 30 years. Retail sales values fell for a second consecutive month in April.
"The concern is we are now about to enter a period of high inflation and much slower growth," said Jeremy Batstone-Carr, head of private client research at Charles Stanley.
"But obviously, by not cutting interest rates any more, the risk is that the UK economy goes through a period of even slower growth and possibly flirts with recession."
Asian shares rose 0.6 per cent, while Chinese shares fell 1.8 per cent.Reuters
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