US index futures are trading flat to down 0.25% this morning, giving back some of yesterday’s gains, while major European indices are trading flat to up 0.2%. Metals are under pressure this morning with Copper down 2.3% and Gold down 0.6%. Energy contracts are up today with gains of 0.3% for WTI Crude Oil and 1.25% for Natural Gas.
Retail sales numbers have been disappointing this morning. Chinese retail sales did not bounce back as much as hoped (18.4% vs street 21.0% and previous 10.6%). US retail sales also grew less than expected (0.4% vs street 0.7%). Meanwhile US retailer earnings got off to a disappointing start as Home Depot missed on sales ($37.2B vs street $38.3B) and reported a 4.5% decline over year in same store sales. Management blamed part of the decline on lower lumber prices and a shift in consumer spending patterns. It remains to be seen if this is a sign of weaker consumer spending, a result of inflation, or if spending patterns are changing now that the pandemic is officially over in the US.
Canadian consumer price inflation data also came in worse than expected with headline CPI rising 4.4% from a year ago, which is more than the 4.1% the street had expected and the 4.3% rate reported last month. Statistics Canada blamed the increase on higher mortgage interest and other housing related costs. This could be a concern as it shows how inflation popped last year as commodity prices soared, driving up interest rates which pushed up mortgage costs which has now come full circle and fed back into inflation even though commodity prices have been coming back down.