U.S. Retail Sales Lift Market indexes, 3-Day Renminbi Devaluation at 4.4%

Nichole Harper
13 Aug, 2015
New York City

S&P 500 and Tollbooth Strategy Index increased after retail sales were stronger than expected. Crude oil extended the recent decline as traders target $35 a barrel. China sought to calm markets after renminbi devaluation extended to 4.4% in three days.

[R]2:05 PM New York City, New York – S&P 500 and Tollbooth Strategy Index increased after retail sales were stronger than expected. Crude oil extended the recent decline as traders target $35 a barrel. China sought to calm markets after renminbi devaluation extended to 4.4% in three days.[/R]

Market indexes on Wall Street traded higher after retail sales were stronger than expected and weekly jobless claims were below the expected range.

Asian markets recovered and currencies stabilized after China led the renminbi decline for the third day and extended the loss to 4.4%.

Seasonally adjusted weekly U.S. jobless claims rose 5,000 to 274,000 from the previous week’s revised claims of 269,000, the Department of Labor said.

Separately, the department reported July import price index increased 0.9% compared to 0.1% decline in June. In July.

Export price index decreased 0.2% following 0.3% drop in June.

U.S. retail sales in July adjusted for seasonality and calendar jumped 0.6% to $446.5 billion from June and increase 2.4% from a year ago month.

Retail sales in three months to July climbed 2.3% from a year ago period, the Department of Commerce said.

On Wall Street, Tollbooth Strategy Index gained 55.69 or 0.5% to 10,857.80.

S&P 500 index rose 6.41 or 0.3% to 2,092.48 and the Nasdaq Composite Index increased 26.40 or 0.5% to 5,070.71.

Crude oil in New York dropped $1.16 to $42.14 a barrel and gold declined $7.90 to $1,115.70 an ounce.

China sought to calm market fears after the central bank let the renminbi float lower and extended three day decline to 4.4%.

Zhang Xiaohui, an assistant governor at the People’s Bank of China at a press conference defended the recent widening of the currency band and sought to deflect the criticism and added “there is no basis for the continued depreciation of the currency.”

U.S. Movers

Cisco Systems, Inc ((CSCO)) increased 3.2% or 90 cents to $28.82 after the internet networking products maker reported revenues in the fourth-quarter ending on July 25 jumped 3.9% to $12.84 billion form a year ago period.

Net income in the quarter climbed 3.1% to $2.32 billion or 45 cents per diluted share compared to $2.25 billion or 43 cents from the same quarter last year.

Cisco said product revenue in the quarter jumped 4% to $9.9 billion and service revenue increased 3.8% to $2.9 billion. Revenues in America climbed 7%.

The company forecasts first-quarter revenues to grow in the range of 2% to 4% and earnings per share between 55 cents and 57 cents.

News Corp ((NWSA)) soared 5.9% or 83 cents to $14.95 after the diversified media and entertainment conglomerate reported revenues in the fourth-quarter ending in June dropped 2.3% to $2.14 billion form a year ago period.

Net in the quarter swung to a loss of $379 million or 65 cents per diluted share compared to profit of $12 million or 2 cents from the same quarter last year.

The company is in “advance talk” with a potential buyer for the education business and plans to wind down the production of tablets for schoolchildren and write-down $371 million in the education division.

European Markets

In London trading, FTSE 100 index slid 5.96 to 6,565.51 and in Frankfurt the DAX index increased 139.43 or 1.3% to 11,064.13.

In Paris, CAC 40 index jumped 80.95 or 1.6% to 5,005.75.

AP Moeller Maersk A/S surged 6.8% to 12,320 kronor after the Denmark-based shipping and logistics company reported revenues in the first-half ending in June declined 11% to $21.07 billion from $23.69 billion in a year ago period.

Net profit in the period tumbled 23.2% from a year ago to $2.61 billion compared to $3.40 billion and diluted earnings per share dropped $121 from $155.

The company plans for a share buy-back program of up to 6.7 billion kronor or about $1 billion to executed in this year.

Nestle SA jumped 3.7% to 74.90 Swiss francs after the Switzerland-based food and beverages maker reported total sales in the first-half period ending in June edged down 0.3% to 42.84 billion francs from 42.98 billion francs in a year ago period.

Profit in the period dropped 2.4% from a year ago to 4.52 billion francs compared to 4.63 billion francs and diluted earnings per share fell to 1.43 franc from 1.45 franc.

Nestle said sales and profit slightly declined in the first-half due to currency fluctuations and a recall of Maggi noodles in India and the company may continue negative organic growth in the second-half.

Asian Markets

Nikkei average in Tokyo rebounded and the yen retained a downward bias as Asian currencies extended losses to the third day after China devalued yuan.

Nikkei average in Tokyo rebounded and the yen retained a downward bias after China devalued yuan for the second day and traders speculated additional weakness in the Chinese currency.

On the economic front, core machine orders in June plunged 7.9% compared to 0.6% increase in May, the Cabinet Office said today.

For the year, core machine orders surged 16.6% followed by 19.3% decline in the previous month.

The Nikkei 225 Stock Average jumped 202.78 or 1% to 20,595.55 and the broader Topix index added 2.20 to 1,667.95.

The yen eased to 124.51 against a dollar.

Softbank Group Corp dropped 2.6% to 7,491 yen after the communication company acquired additional share up to 22.87 million worth about 10.86 billion yen in wireless carrier Sprint Corporation between August 10 and August 12 through its U.S.-based subsidiary Galaxy Investment Holdings, Inc.

Stocks in Mumbai traded higher after two days of decline in choppy trading and rupee dropped to a new low as currencies in Asia continue to slide after China weakened the yuan for two days in a row.

Chinese policy makers have advocated that the recent devaluation of 4.4% over last three days should be extended to 10% to help exporters and sustain economic growth.

However, at a press conference Yi Gang, deputy governor of the People’s Bank of China strongly rejected the widely believed market assumption and said “this is nonsense and is totally unfounded.”

China has essentially pegged the currency to the U.S. dollar and in the year so far before the devaluation the yuan had appreciated 14% against the euro and other emerging market currencies reflecting the rise of the U.S. dollar.

Sugar makers rose after the central government extended deadline to repay loans issued with fewer conditions and at a discounted interest rates.

Telecom stocks gain as the government on Wednesday allowed companies to share airwaves in the same band to reduce call drops, but did not allow leasing of spectrum.

Rupee weakened 33 paisa to 65.10 against one U.S. dollar.

The Sensex Index rose 37.27 to close at 27,549.53. The CNX Nifty added 6.40 to 8,355.85.

Oil & Natural Gas Corp, the largest company in India by market cap said quarterly profit jumped 14% on 4% increase in revenues.

Coal India, the government controlled largest coal miner said net fell 7%.