A look at the day ahead from Tommy Wilkes.
The latest lockdown wave which started late last year is having an even bigger impact on consumer spending than expected. It goes to show how hopes for a rapid economic recovery and “reflation” may be some way off for the hardest hit sectors.
British retail sales tumbled much more than expected in January as non-essential shops went back into coronavirus lockdowns, data showed on Friday. Retail sales volumes fell a whopping 8.2% compared with December, a far bigger fall than the 2.5% decrease forecast in a Reuters poll of economists.
That contrasts with the better-than-expected U.S. retal sales figures released earlier this week. But giant U.S. retailer Walmart delivered sobering news on Thursday, missing quarterly profit estimates and predicted a low-single digit rise in fiscal 2022 net sales. Its shares slid 6.5%
January retail sales in Australia, where the economy has remained relatively open, grew in January but by far less than forecasted.
As for travel and tourism, airlines urged the UK government to include travel in its plan for reopening the economy.
We get British, euro zone and U.S. flash purchasing manager index (PMI) figures for February are due later.
Meanwhile, European stocks are headed for their first weekly fall of 2021, unnerved by the steady rise in bond yields.
German 10-year yields are on course for their biggest weekly rise since June 2020, and U.S. Treasury 10-year yields have risen the most since early January.
European markets are looking to open up slightly, after falls across Asia while Wall Street futures are down marginally.
But while the MSCI World Equity Index is set for a 0.5% weekly drop it is up 5% for the year, as the growing momentum for coronavirus vaccine programmes and hopes of massive fiscal spending under U.S. President Joe Biden spur reflation trades.
In corporate news, German insurer Allianz on Friday posted a smaller-than-expected 2.2% fall in fourth-quarter net profit.
Danone said 2021 would be a year of recovery with sales back to growth from the second quarter. Sales at Birkin bag maker Hermes recovered sharply in the fourth quarter to grow by 16% thanks to a strong performance in Asia.
Key developments that should provide more direction to markets on Friday:
-Flash PMIs in the euro zone, U.S., UK -UK GFK consumer confidence/retail sales -Sweden central bank minutes -U.S. house prices