US Retail Sales in November hit 8-month high - 12.12.2014

US stock indices were traded up on Thursday after three-day fall, due to positive economic reports. The US Retail Sales in November hit eight-month high. It was up 0.7% and outperformed estimates. Initial Claims indicator was also better-than-expected.

The trading volume on US exchanges was 4.5% higher than the last five-day average and reached 6.9 billion stocks. Today at 14:55 СЕТ we expect the release of Michigan Consumer Confidence index. The outlook is positive. However, futures on US stock indices are still traded considerably down. Previously, S&P 500 showed a steady rise for seven weeks in a row, so some investors decided to take profits.

Today European stocks were down on economic and political situation in Greece ahead the presidential elections, which will take place on December 17-29. This week Athens ATG has fallen 21%, pulling down other European stock indices. Industrial output in October will be released at 10-00 СЕТ in the EU. The forecast is neutral. Note the euro strengthening as stock prices dipped. We deem that the single European currency is growing due to the ECB’s euro emission start, postponed for next year. It was stated by the ECB President Mario Draghi last week.

Nikkei ended the week lower as other global stock indices slipped and yen strengthened. Note that parliamentary elections in Japan will be held on Sunday. Most market participants believe that the supporters of the current Prime Minister Shinzo Abe would win the elections. It may trigger the yen weakening and Nikkei growth. Japanese Tankan Survey will be announced on Monday morning. The outlook is neutral.

Oil prices continue to fall. This week it was influenced by the data on the Chinese economy slowdown and, in particular, a reduction in GDP growth forecast for next year. Brent crude oil slipped 8% over the week, and it is down 45% from its June high. The currencies of oil-producing countries such as Russia, Norway and Canada tumbled greatly against the US dollar. International Energy Agency lowered the forecast of world oil demand for next year, the fourth time in last five months. According to this forecast, OPEC should cut the output by 1.4 million barrels next year, to 28.9 million a day compared to November level. The total global oil consumption would rise 1%, or 900 thousand, up to 93.3 million barrels a day. This year the consumption has increased by 700 thousand. According to IEA, the US oil output in 2015 would rise by 685 thousand barrels a day. Algeria and Venezuela are already concerned about the world oil price slump and require an extra OPEC meeting to be held early next year.

This week prices for precious metals have continued the rally. It was the strongest in last six months. We believe that investors buy gold as a safe haven asset amid the retracement of stock indices and the US dollar.