FYI | Oct 14 2007
By Greg Peel
The September retail sales figure was always going to be an important one, but the real question was: what would be a bad number? Worse then expected would increase the chance of another rate cut, and better than expected would mean less chance of a recession.
As it was, it was better than expected – up 0.6% against consensus of 0.3%. The Dow closed up 78 points or 0.5%, while the S&P also rose 0.5% and the Nasdaq jumped 1.2%, erasing most of the losses from Thursday’s Baidu.com downgrade scare.
Further positive economic news cam in the form of August wholesale inventories, which only rose 0.1% instead of 0.3% (although this is old news) while September wholesale prices rose only 0.1% on the core measure. While this indicates no inflation to worry about, add back food & energy and prices rose a full 1.1%.
But the other positive for Wall Street on Friday came in the form of corporate news, particularly the software leader Oracle was looking to buy BEA Systems. The market had been worried that the credit crunch may have put paid to further corporate activity. McDonalds also announced a healthy 5.6% increase in same store sales, while GM rallied strongly again on news offshore auto sales were positive.
The retail sales figure affected a slight rally in the US dollar, although gold closed slightly higher at US$748.10/oz. The Aussie remains strong at US$0.945 but assisting gold was yet another rise in the oil price – to US$83.69/bbl – as concerns continue over supply levels. Base metals were quiet and mixed.
The SPI Overnight rose 32 points.