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U.S retail numbers

Despite Positive Retail Sales Report, the S&P 500 Traded Lower, Gold Prices Fall to 1-Month Low & China’s Government Denounces ‘AUKUS’

S&P 500 down despite increased retail sales

After rebounding in yesterday’s session, the benchmark S&P 500 dropped on Thursday despite U.S. Retail sales increasing last month.

Figures from the Commerce Department showed that sales were up by 0.7% in August, after it was expected that they would decline by 0.8%.

This comes as a welcomed boost to the U.S. economy, after data on Wednesday showed that manufacturing output had fallen, with inflation continuing to rise.

💡Why are retail sales important
Retail sales are an important economic indicator because consumer spending drives much of our economy. Think of all of the people and companies involved in producing, distributing, and selling the goods you use on a daily basis like food, clothes, fuel, and so on.

The Census Bureau releases retail sales data for both month-over-month (MoM) and year-over-year (YoY) percentage changes. MoM data is the most important of the two as it is more likely to alert watchers to an unexpected trend in the making. Markets are also more likely to react to deviations from expectations in these numbers.

Retail Sales currently account for two thirds of the Gross Domestic Product in the United States and come a day before the Michigan Consumer Sentiment index is released.

Despite the better-than-expected result, the NASDAQ and S&P 500 were lower as of writing.

Gold prices fall to 1-month low

Gold prices were also trading lower in today’s session, as investors reacted to the Retail sales figures, plus the weekly initial jobless claims report.

In relation to the jobless claims data, it was shown that 332,000 Americans had applied for state unemployment benefits during the week that ended September 11th.

💡How economic data influences gold prices
Though it’s not set in stone, a stronger U.S. economy — low unemployment, jobs growth, manufacturing expansion, and GDP growth in excess of 2% — has a tendency to push gold prices lower.

Markets had expected the number of applications to come in roughly around 320,000 this week, after falling to a pre-pandemic low during last week’s report.

XAUUSD fell to an intraday low of $1,745 on Thursday, which is the lowest the metal has traded at since August 12th.

Despite today’s fall, which saw prices drop by as much as $41, many believe that there could be further selloffs in store for the metal.

China denounces, Australia pact with U.S. & Britain

On Thursday, it was reported that Britain and the United States had made a pact with Australia, to provide the nation further military defense support.

Under the agreement dubbed AUKUS, Australia will be given the military capabilities to deploy nuclear-powered submarines, which the Chinese government has denounced.

💡 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

In a statement following the agreement, Chinese officials stated that, “China always believes that any regional mechanism should conform to the trend of peace and development of the times and help enhance mutual trust and cooperation… It should not target any third party or undermine its interests”.

The AUS 200 traded higher on the news, with the Hang Seng down for the second consecutive session.

Quote of the day

“An investment in knowledge pays the best interest.”

– Benjamin Franklin

Eliman Dambell

Senior Market Analyst