Strong Retail Data Unable to Lift Wall Street

The news shaping the markets today

Australia’s unemployment rate came in unchanged from the previous month at 4.2% in January. The recent reading was in-line with the consensus estimate and lent support to the AUD/USD forex pair.

Japan’s trade deficit widened sharply to ¥2,191.1 billion in January, from ¥327.16 billion in the year-ago month. The figure was worse than the consensus projection of a deficit of ¥1,607 billion, which sent the JPY/USD pair lower in forex trading this morning.

Singapore’s non-oil domestic exports surged 17.6% year-over-year in January, versus an 18.4% increase a month ago, lending support to the SGD/USD forex pair.

Canada’s headline inflation rate accelerated to 5.1% in January, above market expectations of 4.8%. The news sent the CAD/USD pair lower in forex trading this morning.

Japan’s private-sector machinery orders rose by 3.6% from a month ago in December, surpassing market views of a 1.8% decline. However, the Nikkei 225 index traded lower after the news.

What’s happening: US stocks closed mostly lower on Wednesday, despite stronger-than-expected retail sales data.

What happened: Wall Street sentiment remained subdued on Wednesday after recording sharp gains in the previous session.

One of the major indices turned positive following the release of minutes from the recent Federal Reserve meeting.

Why it matters: Data released on Wednesday showed retail sales growing by 3.8% in January, recovering sharply from a 1.9% decline in the previous month. The strong data, driven by an increase in motor vehicle purchases, came in ahead of market expectations of 2.0% growth.

In other economic reports released on Wednesday, US industrial production rose 1.4% in January, rebounding from a 0.1% decline in December. US import prices rose 2% from a month ago in January, while export prices went up 2.9%. US business inventories grew 2.1% in December.

The data was released ahead of the minutes from the Federal Reserve’s latest meeting, which indicated that the central bank was prepared to increase interest rates soon, as widely projected. The news helped US stocks pare losses and pushed the S&P 500 higher later in the trading session.

Markets sentiment remained subdued despite some easing of Russia-Ukraine tensions, after news of a pullback of Russian troops from Ukraine’s border. However, NATO officials accused Moscow of amassing troops at the Ukrainian border. US President Joe Biden warned that US and its allies were ready to impose sanctions on Russia.

The Dow Jones fell around 55 points, or 0.16%, to close at 34,934.27 on Wednesday, after dipping as much as 300 earlier in the session. The S&P 500 gained 0.09% to close at 4,475.01, while the Nasdaq 100 settled at 14,603.64, down 0.12%.

What to watch: Investors will continue monitoring tensions between Russia and Ukraine. Markets will also await data on initial jobless claims, housing starts and building permits due to be released today. The number of Americans filing new claims for jobless benefits, which fell to 223,000 in the week ended February 5, is expected to decline to 219,000 in the latest week. Analysts project housing starts to decline by 0.5% in January, while building permits are expected to contract by 4%.

The markets today

Crude oil will be in focus today after recording gains on Wednesday

Context: Crude prices settled higher on Wednesday with traders monitoring the Russia-Ukraine situation.

Details: Brent prices climbed around 50% last year, with WTI crude jumping approximately 60%, driven mainly by the global rebound in energy demand.

Crude started this week on a strong note, with both oil benchmarks surging to their strongest levels since September 2014 on Monday. However, oil prices came under pressure on Tuesday after Russia announced a partial withdrawal of its troops from the Ukraine border. Crude prices recovered again on Wednesday due to geopolitical concerns after the US warned Russia of possible sanctions.

The Energy Information Administration reported an increase in US crude inventories by 1.1 million barrels in the latest week and a decline of 1.9 million barrels in the overall inventories at the storage hub in Cushing, Oklahoma.

Brent crude for April delivery gained $1.53 to $94.81 per barrel on Wednesday, following a 3.3% decline in the previous session. WTI rose $1.59 to close at $93.66 per barrel, after declining 3.6% in the prior session.

In other energy trading, wholesale gasoline for March delivery added 1 cent to reach $2.68 a gallon, while March natural gas climbed 41 cents to $4.72 per 1,000 cubic feet.

What to watch: Traders await the EIA’s data on natural gas stockpiles, which had contracted by 222 bcf (billion cubic feet) in the week ending February 4, following a decline of 268 bcf in the prior week.

Other Markets: European trading indices closed mostly lower on Wednesday, with the FTSE 100, DAX 40 and CAC 40 down by 0.07%, 0.28% and 0.21%, respectively. The STOXX Europe 600 index bucked the trend and closed slightly higher by 0.04%.

Support & resistances for today

Market snapshot

What else to watch today

Eurozone’s passenger car registrations, Italy’s balance of trade, Spain’s balance of trade, South Africa’s value of recorded building plans passed, Turkey’s gross foreign exchange reserves and Central Bank of Turkey’s interest rate decision, US Philadelphia Fed manufacturing index, as well as China’s total vehicle sales.