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U.S Consumer confidence on the rise

Disappointing Consumer Sentiment Data Sends U.S. Indices Lower, British Retail Sales Decline & Oil Prices Drop As the U.S. Restarts Production

NASDAQ lower on disappointing consumer sentiment data 

The NASDAQ, as well as other key indices in the United States were trading lower on Friday as consumer sentiment data came in below expectations.

Figures from the University of Michigan sentiment index showed an increase of 71 in the first half of the month, which was up from August’s final reading of 70.3.

Although the mid-month reading was better than August’s figure, which was the lowest since December 2011, it still fell below analyst forecasts for a reading of 72.

Consumer confidence and consumer sentiment – The Key differences and their impact in the markets
Two of the most important numbers that investors listen for every month are based on surveys that aim at understanding and tracking the behavior and mood of the American consumer.

1. Both surveys are conducted monthly but not simultaneously. A sudden rise in gasoline prices or a drop in the stock market can affect the numbers.
2. The Conference Board survey queries a larger sample, while the Michigan survey has more detailed questions.

Many who watch both numbers say that the Conference Board survey tends to be better at picking up on indicators related to the job market and job security, while the Michigan survey is a better measure of pocketbook issues like the price of gasoline. 

Shortly after today’s release, the survey director Richard Curtain stated that, “The steep August falloff in consumer sentiment ended in early September, but the small gain still meant that consumers expected the least favorable economic prospects in more than a decade”.

As of writing, the NASDAQ was trading 0.87% lower. 

British retail sales decline, GBPUSD slips

In the United Kingdom, the FTSE 100 also dropped, with GBPUSD trading lower on the news that retail sales had declined.

According to the data from the Office for National Statistics retail sales fell by 0.9% last month, whilst remaining above pre-pandemic levels.

Many believe that the drop in retail sales comes as Brits opt to eat-out choosing restaurants, opposed to shopping at supermarkets.

💡 The Delta Variant and its effect on the recovery
As fatalities rise with the now dominant delta variant, people are becoming weary of going out. Hospitality and leisure related industries have been the hardest-hit. Recovery in these areas will come at a slower pace

This was somewhat validated with figures showing that the Clothing and footwear sector was the only area to see sales rise in August.

GBPUSD hit an intraday low of 1.3741, its lowest level since September 8th, whilst the FTSE 100 fell below the 7000 level, closing the week 0.91% lower.

Oil Price down as U.S. supply restarts

After five consecutive sessions of trading higher, prices of crude oil today slipped, as several energy companies restarted production.

It was reported that as a result of the recent Hurricanes in the region, some companies in the U.S. Gulf of Mexico halted operations.

Weather and Oil Prices
Weather also plays a significant role in the supply of crude oil. Hurricanes in the Gulf of Mexico can affect oil production and refinery operations in the Gulf region. As a result, U.S. petroleum product prices may increase sharply as supplies from the Gulf to other regions drop. 

Many believe that this contributed to the recent rise in energy prices, however if this supply channel has once again reopened, prices may begin to stabilize.

WTI crude fell to an intraday low of $71.23 in today’s session, cementing a decline of roughly 1%.

This drop could worsen in upcoming days, with one third of output in the region still reportedly offline.

Quote of the day – “Accepting losses is the most important single investment device to ensure the safety of capital.”

– Gerald M. Loeb

Eliman Dambell

Senior Market Analyst

 

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