Macro Roundup (Jan 18)

SHANGHAI, Jan 18 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

Stocks and oil prices fell on Friday pressured by intensifying lockdowns and weak U.S. retail sales data, while the dollar was on track to post its strongest week in over two months.

U.S. bond yields and stocks had risen recently partly on the back of expectations of the rollout of coronavirus vaccines and on a massive stimulus plan by the incoming Democratic administration.

President-elect Joe Biden on Thursday unveiled a $1.9 trillion fiscal plan. Biden’s proposal, called the American Rescue Plan, includes increasing the additional federal unemployment payments to $400 per week and extending them through September, direct payments to many Americans of $1,400, and extending the federal moratoriums on evictions and foreclosures through September.

But vaccinations have been slower to administer than expected and the prospect of stricter lockdowns in France and Germany, as well as a resurgence of COVID-19 cases in China, weighed on market sentiment.

On Wall Street, stocks fell on Friday to close out a tough week as traders weighed President-elect Joe Biden’s $1.9 trillion stimulus plan along with the latest earnings from some of the biggest U.S. banks.

The Dow Jones Industrial Average closed 177.26 points lower, or 0.6%, at 30,814.26. Earlier in the day, the Dow was down more than 300 points. The S&P 500 dipped 0.7% to 3,768.25, and the Nasdaq Composite slid 0.9% to end the day at 12,998.50.

Oil prices fell more than 2% on Friday as concerns about Chinese cities in lockdown due to coronavirus outbreaks tempered a rally driven by strong import data from the world’s biggest crude importer and U.S. plans for a large stimulus package.

Brent crude fell $1.32, or 2.34%, to settle at $55.10 per barrel, after gaining 0.6% on Thursday. U.S. West Texas Intermediate crude settled $1.21, or 2.26%, lower at $52.36 per barrel, having risen more than 1% the previous session.

Gold prices slumped more than 1% on Friday and the metal was heading for a second straight weekly drop as the dollar continued its upturn, overshadowing bullion’s appeal as an inflation hedge as the United States rolls out more stimulus.

Spot gold was down 1% at $1,827.90 per ounce, having earlier declined as much as 1.3%, while U.S. gold futures settled down 1.2% at $1,829.90.

In Europe, Italy has been plunged into political turmoil once again as former Prime Minister Matteo Renzi decided to pull his support for the current coalition government on Wednesday. Current Prime Minister Giuseppe Conte resisted calls to resign, despite being stripped of the coalition’s parliamentary majority.

Meanwhile, the whole Dutch government collectively resigned on Friday after a scandal involving the mismanagement of childcare funds, which drove thousands of families into financial hardship.

In Germany, the two-day special congress of the ruling Christian Democratic Union party began Friday, with Chancellor Angela Merkel’s potential successor due to be selected on Saturday.

The U.K. economy contracted by 2.6% in November as the country implemented fresh lockdown measures, according to official estimates published Friday.

France’s official statistics agency reported Friday that December CPI (consumer price index) inflation came in at 0.0% year on year and 0.2% month on month.

Key economic data slated for release today include China’s total retail sales of consumer goods for December, fourth-quarter GDP and fixed asset investment in 2020.