By Geoffrey Smith
Investing.com -- Brace for a welter of bad economic data, with retail sales and industrial output figures for April, along with the key Michigan consumer sentiment survey. Stocks are drifting lower ahead of the releases. China's factories are coming back to life, but its consumers are keeping their wallets tight shut. The House may vote on the Democrats' new $3 trillion economic support package. And gold and silver continue their rally, alongside an oil market that is mastering its fear of supply-demand imbalances. Here's what you need to know in financial markets on Friday, May 15th.
1. Retail sales to lead a round of grim data
The stock market weathered another week of bad jobless numbers – can it now weather what should be a record drop in retail sales?
April’s data, due at 8:30 AM ET (1230 GMT), are expected to show a 12% drop from March, the biggest monthly drop on record.
The numbers head a busy end to the week on the data front, with industrial production and manufacturing output due at 9:15 AM. They’re expected to have fallen 11.5% and 13%, respectively.
Masochists can also keep an eye out for the Empire State Manufacturing index at 8:30 AM and the Michigan consumer sentiment index at 10 AM.
2. China's factories perk up, its consumers - not so much
If China is any guide, then the producer is recovering faster than the consumer.
Chinese data published earlier showed the country’s industrial production rose in year-on-year terms for the first time since the pandemic erupted, the 3.9% increase outpacing the 1.5% expected. Even so, output year-to-date is still down 4.9%, an unprecedented decline.
Current output was the only bright spot in a Chinese data dump that saw retail sales still down 7.5% on the year, well below forecasts, and fixed asset investment down 10.3% on the year, marginally worse than expected.
China’s A shares market fell 0.4%, while the tech-heavy CSI 300 was flat.
3. Stocks set to edge higher but still down for the week
U.S. stocks are set to open modestly lower, on course to end the week down amid concerns about new waves of coronavirus infections both at home and abroad.
By 6:30 AM ET (1030 GMT), the Dow Jones 30 Futures contract was down 84 points or 0.3%, while the S&P 500 futures contract and the Nasdaq 100 futures contract were down 0.2%.
Crude oil futures were in a more clearly positive trend, with U.S. crude rising 2.0% to $28.09 while the international benchmark Brent rose 2.2% to $31.80 as increased signs that the market is rebalancing bolstered confidence that the expiry of this month’s futures contract will pass off more smoothly than last month’s.
4. House may vote on new Democratic stimulus package
The House may move to vote on the Democrats’ new $3 trillion economic support bill later Friday, although comments from the Senate and the administration suggest there is little chance of it passing into law in its current form.
The so-called Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act would expand unemployment assistance, boost food stamps and increase emergency grants to small businesses.
5. Gold, silver shine as faith in other assets wavers
The sight of governments across the world throwing money at the Covid-19 pandemic continues to support precious metals prices.
Gold futures hit a three-week high overnight and are consolidating within sight of the 8-year high that they posted last month, at $1,740.75 a troy ounce. Silver futures meanwhile have hit their highest in two months at $16.64 an ounce.
However, U.S. Treasury yields aren’t buying the currency debasement argument yet: they’re broadly unchanged, only a couple of basis points off the historic lows they set earlier in the month, supported by the belief that the Covid-19 impact will be deflationary before it ever turns inflationary.