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| US retail sales rise and consumer confidence jumps - as it happened | |
| (about 1 hour later) | |
| 6.12pm BST | |
| 18:12 | |
| US oil rig count falls again | |
| The number of oil rigs in use in the US has dropped for the eighth week in a row. | |
| Total rig numbers dropped by 9 to 406, according to the weekly Baker Hughes rig count. Of this, 10 oil rigs were cut, but one gas rig was added. This was the lowest level since October 2009, as companies concentrated on completing existing wells rather than drilling new ones. | |
| The oil price, which was already in negative territory, was little changed after the figures, with Brent crude now down 0.79% at $47.7. | |
| On that note, it’s time to close for the day and indeed the week. Thanks for all your comments, and we’ll be back next week. | |
| 5.17pm BST | 5.17pm BST |
| 17:17 | 17:17 |
| European shares end higher | European shares end higher |
| Despite a mixed bag of economic data, European shares have ended the week on a positive note. There were some poor UK construction figures, while European growth figures were revised down, albeit by less than feared. The news from the US was better, with positive retail sales and confidence figures providing some support for markets. | Despite a mixed bag of economic data, European shares have ended the week on a positive note. There were some poor UK construction figures, while European growth figures were revised down, albeit by less than feared. The news from the US was better, with positive retail sales and confidence figures providing some support for markets. |
| Investors even took the latest warnings on Brexit - this time from the IMF - in their stride. The final scores showed: | Investors even took the latest warnings on Brexit - this time from the IMF - in their stride. The final scores showed: |
| On Wall Street the Dow Jones Industrial Average is currently down 47 points or 0.27%. | On Wall Street the Dow Jones Industrial Average is currently down 47 points or 0.27%. |
| 4.41pm BST | 4.41pm BST |
| 16:41 | 16:41 |
| Standard & Poor’s has confirmed its ratings on Italy with a stable outlook. The agency said: | Standard & Poor’s has confirmed its ratings on Italy with a stable outlook. The agency said: |
| We project that Italy’s economic recovery will stay on track, despite having revised downward our forecast for real GDP growth to 1.1% in 2016 and 1.3% in 2017 (from 1.3% and 1.4% in our previous review). | We project that Italy’s economic recovery will stay on track, despite having revised downward our forecast for real GDP growth to 1.1% in 2016 and 1.3% in 2017 (from 1.3% and 1.4% in our previous review). |
| We view as positive, recent initiatives to support Italian banks and reduce the high level of nonperforming loans in the banking sector, although we believe they alone may not be sufficient to fully address the related challenges. | We view as positive, recent initiatives to support Italian banks and reduce the high level of nonperforming loans in the banking sector, although we believe they alone may not be sufficient to fully address the related challenges. |
| We are affirming our long- and short-term sovereign credit ratings on the Republic of Italy at ‘BBB-/A-3’. | We are affirming our long- and short-term sovereign credit ratings on the Republic of Italy at ‘BBB-/A-3’. |
| The stable outlook reflects our expectation that the Italian government will continue to implement comprehensive and potentially growth-enhancing structural and budgetary reforms that will stabilise, and start reducing, the very high public debt ratio. | The stable outlook reflects our expectation that the Italian government will continue to implement comprehensive and potentially growth-enhancing structural and budgetary reforms that will stabilise, and start reducing, the very high public debt ratio. |
| 3.52pm BST | 3.52pm BST |
| 15:52 | 15:52 |
| The dollar has continued to strengthen following the better than expected US data, despite analysts still not convinced the country’s economy is strong enough for the Federal Reserve to raise interest rates at its June meeting. | The dollar has continued to strengthen following the better than expected US data, despite analysts still not convinced the country’s economy is strong enough for the Federal Reserve to raise interest rates at its June meeting. |
| Against the pound, the US currency is currently at a three week high of $1.4343, up around 0.8% on the day. Brexit worries are also weakening sterling, with the IMF’s statements the latest in a serious of dire warnings about the impact of the UK leaving the EU. | Against the pound, the US currency is currently at a three week high of $1.4343, up around 0.8% on the day. Brexit worries are also weakening sterling, with the IMF’s statements the latest in a serious of dire warnings about the impact of the UK leaving the EU. |
| Updated | Updated |
| at 4.13pm BST | at 4.13pm BST |
| 3.22pm BST | 3.22pm BST |
| 15:22 | 15:22 |
| Despite the strong US data today, the Federal Reserve may still decide not to hike rates in Junes, says James Knightley at ING Bank: | Despite the strong US data today, the Federal Reserve may still decide not to hike rates in Junes, says James Knightley at ING Bank: |
| [The sentiment data] bodes well for consumer spending in 2Q16, particularly after the stronger than expected April retail sales report. While many at the Fed are keen to tighten monetary policy further we still feel that June is perhaps a little too early given the softness in data seen earlier in the year. We instead continue to favour a 3Q rate hike. | [The sentiment data] bodes well for consumer spending in 2Q16, particularly after the stronger than expected April retail sales report. While many at the Fed are keen to tighten monetary policy further we still feel that June is perhaps a little too early given the softness in data seen earlier in the year. We instead continue to favour a 3Q rate hike. |
| 3.10pm BST | 3.10pm BST |
| 15:10 | 15:10 |
| US consumer confidence jumps | US consumer confidence jumps |
| Following the better than expected US retail sales figures comes news that consumer confidence is higher than forecast so far this month. | Following the better than expected US retail sales figures comes news that consumer confidence is higher than forecast so far this month. |
| The University of Michigan survey of consumer sentiment rose from 89 in April to 95.8 in a preliminary reading for May. Analysts had expected a rise to 90. | The University of Michigan survey of consumer sentiment rose from 89 in April to 95.8 in a preliminary reading for May. Analysts had expected a rise to 90. |
| This is the highest reading since June 2015. | This is the highest reading since June 2015. |
| The survey compilers said: | The survey compilers said: |
| Consumer sentiment rebounded in early May due to more frequent income gains, an improved jobs outlook, and the expectation of lower inflation and interest rates. The largest gains were recorded among lower income and younger households, although the gains were recorded among all income and age subgroups as well as across all regions. | Consumer sentiment rebounded in early May due to more frequent income gains, an improved jobs outlook, and the expectation of lower inflation and interest rates. The largest gains were recorded among lower income and younger households, although the gains were recorded among all income and age subgroups as well as across all regions. |
| Nearly all of the gains were in the Expectations Index, which rose to its highest level in nearly a year. To be sure, the data still indicated the negative impact of uncertainty about future economic policies associated with the Presidential election, but its overall impact was overwhelmed by favourable economic developments. It is too early to judge the potential impact of the election on consumers’ expectations, and one month’s rebound in consumer confidence is insufficient to increase the current forecast for inflation-adjusted consumer expenditures from 2.5% during 2016. | Nearly all of the gains were in the Expectations Index, which rose to its highest level in nearly a year. To be sure, the data still indicated the negative impact of uncertainty about future economic policies associated with the Presidential election, but its overall impact was overwhelmed by favourable economic developments. It is too early to judge the potential impact of the election on consumers’ expectations, and one month’s rebound in consumer confidence is insufficient to increase the current forecast for inflation-adjusted consumer expenditures from 2.5% during 2016. |
| 3.03pm BST | 3.03pm BST |
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| And the Slovak finance minister has called for a swift agreement, with or without the IMF: | And the Slovak finance minister has called for a swift agreement, with or without the IMF: |
| We would like to see a swift agreement unlocking a needed tranche for #Greece, with or without the #IMF consent if necessary. #eurozone | We would like to see a swift agreement unlocking a needed tranche for #Greece, with or without the #IMF consent if necessary. #eurozone |
| 3.01pm BST | 3.01pm BST |
| 15:01 | 15:01 |
| Greece and its creditors are close to agreeing a basic package of measures worth €5.4bn, paving the way for a loan tranche of some €10bn to be released, according to the Athens-Macedonia-News Agency. | Greece and its creditors are close to agreeing a basic package of measures worth €5.4bn, paving the way for a loan tranche of some €10bn to be released, according to the Athens-Macedonia-News Agency. |
| Clues emerge on size next payments to Greece: could be €9bln-€11bln with support to clear growth-sapping arrears. #Eurogroup still to decide | Clues emerge on size next payments to Greece: could be €9bln-€11bln with support to clear growth-sapping arrears. #Eurogroup still to decide |
| Three hurdles before Greece can get next bailout payment: pass laws on 1% savings, EU verification, eurozone approval... all by 24 May. | Three hurdles before Greece can get next bailout payment: pass laws on 1% savings, EU verification, eurozone approval... all by 24 May. |
| Updated | Updated |
| at 3.03pm BST | at 3.03pm BST |
| 2.52pm BST | 2.52pm BST |
| 14:52 | 14:52 |
| Here are the percentage changes in retail sales from the previous month: | Here are the percentage changes in retail sales from the previous month: |
| 2.39pm BST | 2.39pm BST |
| 14:39 | 14:39 |
| More on the US retail sales. | More on the US retail sales. |
| The better than expected figures have eased some concerns about the state of the US economy, says David Morrison, senior market strategist at Spreadco: | The better than expected figures have eased some concerns about the state of the US economy, says David Morrison, senior market strategist at Spreadco: |
| The number comes as a real relief for investors as it rounds off a week which has brought a lot of pain for US retailers. Department store operators Macy’s and Nordstrom posted weak earnings and slashed their forward guidance for the rest of the year. This comes on top of a number of high profile retail bankruptcies including American Apparel, Quicksilver and Aeropostale. | The number comes as a real relief for investors as it rounds off a week which has brought a lot of pain for US retailers. Department store operators Macy’s and Nordstrom posted weak earnings and slashed their forward guidance for the rest of the year. This comes on top of a number of high profile retail bankruptcies including American Apparel, Quicksilver and Aeropostale. |
| All of this goes to demonstrate the US consumer’s unwillingness (or inability) to spend money, particularly on clothes and accessories. This is particularly worrying as consumer spending is widely accepted as accounting for over 70% of all US economic activity. If the recent disappointing news on payrolls and jobless claims proves to be the start of a trend rather than a blip, then there could be worse to come. But today’s retail sales numbers go some way to offsetting these concerns. | All of this goes to demonstrate the US consumer’s unwillingness (or inability) to spend money, particularly on clothes and accessories. This is particularly worrying as consumer spending is widely accepted as accounting for over 70% of all US economic activity. If the recent disappointing news on payrolls and jobless claims proves to be the start of a trend rather than a blip, then there could be worse to come. But today’s retail sales numbers go some way to offsetting these concerns. |
| April department store sales -2.9% y/y. Non-store retailers +8.5% y/y. Structural change, in two numbers. | April department store sales -2.9% y/y. Non-store retailers +8.5% y/y. Structural change, in two numbers. |
| Steve Murphy, US economist at Capital Economics, said: | Steve Murphy, US economist at Capital Economics, said: |
| The retail sales report shows that recent claims of the demise of the US consumer have been greatly exaggerated. Thanks to a massive 0.9% month on month gain in control sales in April and a sizeable rebound in motor vehicle sales, it now appears that second-quarter GDP growth will be close to 3.0% annualised... | The retail sales report shows that recent claims of the demise of the US consumer have been greatly exaggerated. Thanks to a massive 0.9% month on month gain in control sales in April and a sizeable rebound in motor vehicle sales, it now appears that second-quarter GDP growth will be close to 3.0% annualised... |
| At this stage, a June rate hike is a toss-up. The activity data certainly warrants a hike, but separately we are becoming worried that May’s employment figures could be pulled down by a couple of big temporary factors. Given how cautious the Yellen-led Fed has shown itself to be, the decision next month could go either way. | At this stage, a June rate hike is a toss-up. The activity data certainly warrants a hike, but separately we are becoming worried that May’s employment figures could be pulled down by a couple of big temporary factors. Given how cautious the Yellen-led Fed has shown itself to be, the decision next month could go either way. |
| 2.34pm BST | 2.34pm BST |
| 14:34 | 14:34 |
| US markets open slightly down | US markets open slightly down |
| US markets have opened roughly flat, just a touch into the red: | US markets have opened roughly flat, just a touch into the red: |
| 2.20pm BST | 2.20pm BST |
| 14:20 | 14:20 |
| Most major European markets are up this afternoon, but the FTSE 100 is off slightly. | Most major European markets are up this afternoon, but the FTSE 100 is off slightly. |
| Christine Lagarde’s warning this morning that Brexit would send shockwaves through the UK economy - prompting the stock market and house prices to crash - is not helping sentiment. | Christine Lagarde’s warning this morning that Brexit would send shockwaves through the UK economy - prompting the stock market and house prices to crash - is not helping sentiment. |
| 2.10pm BST | 2.10pm BST |
| 14:10 | 14:10 |
| James Knightley, economist at ING, says that the jump in US retail sales won’t be enough to convince the Federal Reserve it’s time to raise interest rates just yet. | James Knightley, economist at ING, says that the jump in US retail sales won’t be enough to convince the Federal Reserve it’s time to raise interest rates just yet. |
| This report is likely to generate some encouraging headlines suggesting a bounceback in consumer activity, and it certainly is good news. | This report is likely to generate some encouraging headlines suggesting a bounceback in consumer activity, and it certainly is good news. |
| However, the Federal Reserve will want to make sure it isn’t just a one-off. With other activity indicators suggesting that there has been something of a loss of momentum over the past twelve months we still favour just one-rate rise this year, which will most likely come in the third quarter of 2016. | However, the Federal Reserve will want to make sure it isn’t just a one-off. With other activity indicators suggesting that there has been something of a loss of momentum over the past twelve months we still favour just one-rate rise this year, which will most likely come in the third quarter of 2016. |
| We continue to doubt that the Fed will hike in June. This partly reflect the need for a better run of data, but also external risks. One of those is Brexit – should the UK vote to leave the EU on June 23rd this could see both the euro and sterling tumble against the dollar, which will lead to a tightening of financial conditions that may deter the Fed from tightening policy. | We continue to doubt that the Fed will hike in June. This partly reflect the need for a better run of data, but also external risks. One of those is Brexit – should the UK vote to leave the EU on June 23rd this could see both the euro and sterling tumble against the dollar, which will lead to a tightening of financial conditions that may deter the Fed from tightening policy. |
| 1.52pm BST | 1.52pm BST |
| 13:52 | 13:52 |
| The monthly 1.3% jump in April retail sales was the biggest increase in more than a year. | The monthly 1.3% jump in April retail sales was the biggest increase in more than a year. |
| The number for March was also revised up, to show a 0.3% rise and not the 0.4% drop previously estimated. | The number for March was also revised up, to show a 0.3% rise and not the 0.4% drop previously estimated. |
| The increase was broad-based across different kinds of goods, but car sales were particularly strong. | The increase was broad-based across different kinds of goods, but car sales were particularly strong. |