US retail sales report helps steady markets
LONDON (AP) -- Modestly stronger than anticipated U.S. retail sales figures helped shore up sentiment across financial markets Thursday despite disappointing Chinese economic figures and a rate hike in New Zealand.
Government figures showed that U.S. retail sales rose by 0.3 percent in February from the previous month. That was the first monthly increase in three months and was just ahead of the consensus in the markets. U.S. retail sales are a particularly important barometer of the health of the U.S. economy as they account for around 70 percent of all activity.
"The U.S. consumer might not have ventured out to the usual extent for the time of year on account of cold, snowy conditions, but investors will be warmed by news that those that stayed at home last month bought more at online venues," said Andrew Wilkinson, chief market analyst at Interactive Brokers.
The figures helped stocks on Wall Street's open, where the Dow Jones industrial average was trading 0.2 percent higher at 16,377 and the S&P 500 index firmed 0.1 percent to 1,870.
In Europe, the mood was more cautious, partly because of concerns over the situation in Ukraine ahead of Sunday's referendum in the region of Crimea on whether to join Russia.
The FTSE 100 index of leading British shares was down 0.3 percent at 6,603 while Germany's DAX rose 0.1 percent to 9,193. The CAC-40 in France was 0.1 percent lower at 4,303.
The euro, meanwhile, was making ground and headed toward the $1.40 mark for the first time since 2011. It was trading 0.4 percent higher at $1.3967, its strongest level since October 2011.
Most market attention, though, remains focused on China amid fears that its economy is beginning to struggle. Those fears accentuated Thursday after government figures showed industrial production rose by a lower than anticipated 8.6 percent in the first two months of this year. Retail sales growth also fell short of estimates.
Markets largely brushed aside the move by the Reserve Bank of New Zealand to raise its main interest rate by a quarter of a percentage point to 2.75 percent. Though other central banks have raised rates since the global financial crisis of 2008, such as increases in 2011 by the European Central Bank and Sweden's Riksbank, analysts said the move by the New Zealand central bank may represent a milestone in the global recovery.
Craig Erlam, market analyst at Alpari said the move marked "the beginning of a new chapter for the recovery in the global economy."
Earlier in Asia, trading was lackluster, with Japan's Nikkei 225 closing down 0.1 percent at 14,815.98 while Hong Kong's Hang Seng sank 0.7 percent to 21,756.08.
But in mainland China, the Shanghai Composite rose 1.1 percent to 2,015.03.
"With the Chinese central bank poised to cut the amount of cash banks must keep as reserves in an attempt to stimulate the economy, the local rally can perhaps be justified," said Patrick Latchford at Valutrades.