Record highs on Wall Street overnight pushed Asian share markets higher, propping up European markets early Thursday. Respectable earnings from Bank of America and decent US economic data warmed investors after last Friday’s damp jobs report. US markets fell sharply in the wake of the jobs report but since have turned around following encouraging data out of the retail and business sectors. Overnight in Asia, Japanese machine orders rose a healthy 9.3% in November – indicating that PM Abe’s push to Japanese companies to invest in expansion may be paying off. Closer to home, the risk tone is stable but market participants are hesitant with some big profile data and earnings out for today and Friday whilst also chewing over today’s host of European earnings. UK retailers taking the spotlight again with Home Retail, Dixons and Halfords, all actually reported strong Xmas sales numbers; Home Retail, the owner of Argos and Homebase saw strong performance by both businesses and noted that digital sales and discounting drove group sales performance; that’s a big turnaround for Argos which only a year ago was suffering at the hands of stiff competition from Amazon and co. Dixons meanwhile, benefited from discounting, reporting solid LFL sales and also gained market share, much to the surprise of many in the market who were convinced that online retailers like Amazon and Tesco Direct would have eaten away at Dixons’ market share. There emerging theme here is that management at both Dixons and Argos/Homebase have geared the businesses toward digital sales, beefing up their online offering, and, it’s bearing fruit. Not so long ago, many felt that these business were losing their battle in the retail sector, particularly due to the weak online presence however, encouragingly, both Dixons and Home Retail have caught up with rivals and are now back in the game. Looking to some of the day’s economic events, we have euro zone and US inflation figures which will be key as many economists now feel that with lower inflation in developed economies, we could be facing a new era of deflation. Jobless claims for the US and Fed’s outgoing head Bernanke’s speech will also be closely scrutinized. US earnings continue with Goldman Sachs, Citigroup and BlackRock before the opening bell and Amex, Capital One and Intel all due after the closing bell. ________________________________________ Ishaq Siddiqi Market Strategist
Posted on: Thu, 16 Jan 2014 08:35:35 +0000
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