US retail sales disappointment weighs on markets

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US retail sales disappointment weighs on markets

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A disappointing US retail sales report weighed on stock markets Monday.

16 July,2012 07:28 pm

The U.S. Commerce Department reported that retail sales fell 0.5 percent in June from the previous month. That was the third straight monthly fall the first such run since the autumn of 2008, at the height of the banking crisis. The decline was also unexpected the consensus in the markets was for a modest 0.2 percent increase.Paul Ashworth, chief U.S. economist at Capital Economics, said the figures provided further evidence of how the worlds largest economy has gone from first-quarter hero to second-quarter zero.Worries about the U.S. economy are one of the concerns that have dominated markets in recent weeks, alongside Europes debt crisis and a cooling off in Chinas economic growth.The reaction in the markets to the weaker U.S. economic figures has been muted, however, as investors think the U.S. Federal Reserve may sanction another monetary stimulus. Previous stimulus efforts have helped shore up markets temporarily.All eyes will be on Fed chairman Ben Bernanke when he addresses lawmakers on Tuesday.The weak (retail sales) report is likely to add weight to Bernankes words, said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co.In Europe, the FTSE 100 index of leading British shares was down 0.2 percent at 5,656 while Germanys DAX fell 0.3 percent to 6,542. The CAC-40 in France fell 0.3 percent, too, to 3,170.On Wall Street, the Dow Jones industrial average was down 0.4 percent at 12,721 while the broader S&P 500 index fell 0.3 percent to 1,352.In the currency markets, the dollar lost some of its shine, allowing the euro to clamber back from a two-year low of $1.2174. By midafternoon, the euro was 0.1 percent lower on the day at $1.2230.Positive earnings from Citigroup had little market impact. Investors will nevertheless be keeping a close watch on a raft of U.S. corporate earnings statements this week.Over the course of the week, around 90 companies listed on the S&P 500 are due to report earnings. They include Bank of America, Coca-Cola, Goldman Sachs, Google, IBM, Intel, Microsoft and Morgan Stanley.It is worth noting that earnings expectations have been massaged down again this quarter, so the majority of companies should once again hit analysts targets, said Morrison. Assuming that they do, then this reporting season should be uneventful.Europes debt crisis will also remain near the top of markets concerns. In particular, investors will be awaiting details of Spains bank bailout. Later this week, eurozone countries are expected to give Spain €30 billion as part of a larger bailout for its banks.Worries over Spain and the other indebted euro countries have weighed on Europes single currency over the past few weeks.Earlier in Asia, Hong Kongs Hang Seng inched up 0.2 percent to 19,121.34 and South Koreas Kopsi rose 0.3 percent to 1,817.79. Australias S&P/ASX 200 added 0.6 percent to 4,105.10. Markets in Indonesia and the Philippines also rose. Chinas Shanghai Composite lost 1.7 percent to 2,147.96. Japans markets were closed for a public holiday.In energy trading, benchmark crude for August delivery was up 9 cents at $87.19 a barrel in electronic trading on the New York Mercantile Exchange.