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Fed Minutes, Retail Sales, Airbnb – What’s Moving Markets

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By Geoffrey Smith — Retail sales data for January and the minutes from the Federal Reserve’s last policy meeting are set to dominate the day’s trading, as fears of a Russian invasion of Ukraine continue to ease. The process of detente is looking likely to be slow and drawn-out, however. Airbnb stock is on the up after a bright update late on Tuesday. Wynn Resorts (NASDAQ:WYNN) and ViacomCBS (NASDAQ:VIAC) are not so fortunate. Inflation continues to advance in the developed world, but there are tentative signs of an improvement in China. Here’s what you need to know in financial markets on Wednesday, 16th February.

1. Retail Sales, Industrial Production due

Belt up and get ready for the latest big U.S. economic numbers, heading your way at 8:30 AM ET. Retail sales are expected to have posted their biggest jump in 10 months in January, at 2.0%, after their biggest monthly decline in nearly a year in December.

That kind of volatility is an eloquent testimony to how the pandemic, with its various waves, has disrupted the usual consumer spending patterns. Investors will once again need to look through such distortions – this time from the Omicron wave – to distinguish noise from signal.

Industrial production data due at 9:15 AM ET will also be subject to some of the same factors. It’s expected to have risen 0.4% last month. The National Association of Homebuilders monthly housing market index, meanwhile, is due out at 10 AM ET.

2. Global markets still jittery after Russia de-escalates only a little

Global markets are still jittery about the situation on the Ukrainian border, amid warnings from the Ukrainian government and from NATO that Russia still has high troop concentrations capable of launching an invasion.

Russian newswires, in turn, cited diplomatic sources on Wednesday as saying that troop withdrawals – from regions including Crimea – will continue over the next three to four weeks.

The Russian ruble strengthened to its highest in nearly a week, suggesting that locals, at least, have become more sanguine about the chances for peace. However, European natural gas futures, which have eased in recent days, started to edge up again.   

3. Stocks set to drift lower; Fed Minutes eyed; Airbnb’s bright update

U.S. stock markets are set to open mostly lower, as participants hold fire ahead of the big economic data later. Late trading in particular will be dominated by the minutes from the last Federal Reserve meeting, which are due for release at 2 PM ET.

In recent months, the Fed’s minutes have developed a habit of being more hawkish than its policy statement and press conference, causing volatility toward the end of the trading day.

By 6:15 AM ET, Dow Jones futures were down 68 points or 0.2%, while S&P futures and Nasdaq 100 futures were down by a similar amount. All three had posted solid gains on Tuesday on relief at the apparent de-escalation on the Ukrainian border.

Stocks likely to be in focus include Airbnb, whose fourth-quarter results reinforced perceptions that the pandemic has permanently shifted customer behavior in a way that will be profitable for it. ViacomCBS and Wynn Resorts, however, are headed in the other direction after weaker-than-expected updates. Hilton Worldwide and Kraft Heinz lead the early earnings roster, while Nvidiaand Cisco report after the bell.

4. Inflation roars ahead in U.K., eases in China; Canada data due

The Great Inflation Narrative continues to progress all over the world. U.K. consumer prices again overshot expectations in January, leaving the annual rate of inflation at 5.5%. Producer price inflation accelerated to 9.9%. also above expectations.  That all adds to pressure on the Bank of England to raise its key rate for a third straight meeting in March. The pound rose 0.3% to its highest in nearly two weeks.

There was better news from China, where both consumer and produce price inflation eased in January. The picture was the same in South Africa. 

Canada, whose central bank is also fingering the interest rate trigger, will release its CPI at 8:30 AM ET.

In the corporate sector, meanwhile, brewer Heineken (OTC:HEINY) warned that input inflation pressures were “off the charts”, but was still confident that it could offset them through what it calls “premiumization” – i.e., higher prices.

5. Oil rebounds after sharp drop; EIA inventories eyed

Crude oil prices regained their upward after falling heavily in response to Wednesday’s news out of eastern Europe.

By 6:20 AM ET, U.S. crude futures were up 0.8% at $92.77 a barrel, while Brent crude was up 0.9% at $94.07 a barrel.

U.S. inventory data, due from the government at 10:30 AM ET, appear likely to confirm a picture of ongoing tightness due to strong demand and a sluggish response from domestic and foreign producers. The American Petroleum Institute’s numbers showed a 1.08 million barrel drop in crude stocks last week – albeit that was a little less than expected.

Fed Minutes, Retail Sales, Airbnb – What’s Moving Markets

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