Stocks Head For Weekly Gain As Fears Ease & Retail Sales Smash Forecasts
Fiona Cincotta June 19, 2020 2:41 PM
European bourses are heading for a cautiously higher start after a mixed close on Wall Street in low volumes. Shares drifted in the Asian session. European markets are still heading for a weekly gain despite concerns of a second wave of coronavirus, which dragged the markets lower last week, still lingering.
UK retail sales smash expectations
UK retail sales surged +12% in May compared with the previous month, smashing expectations of a more conservative +5.7% increase, as lockdown measures started to ease. The jump in sales goes some way to making up from the record -18.1% decline in sales the previous month.
Given that lockdown measures didn’t start to ease until the second half of May, these figures are certainly encouraging. However, there will almost certainly be a strong element of pent up demand in the record-breaking data. With unemployment low and the labour market supported by the government’s furlough scheme, there is a good chance that retail sales could remain buoyed for the coming month. What will be interesting to see is whether retail sales manage to remain positive when the government starts withdrawing from the furlough scheme.
Oil extends gains on strong supply / demand fundamentals
Oil prices are on the rise, building on gains from the previous session, as demand continued to show signs of improvement whilst OPEC members also pledged to meet their supply cuts commitments. With the expectation growing that overproduction in May, will be compensated for over the coming months with lower production, the net effect will be positive for the price of oil. Iraq and Kazakhstan have revealed plans to compensate with lower production, investors are optimistic that they won’t be alone. WIT is trading +1.3% in early trade as it looks to target $40.00.
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