Tuesday Morning Cheat Sheet: 3 Stories Moving Markets

Markets advanced in Asia on Tuesday. Japan’s Nikkei climbed 2.05 percent, its best one-day gain in three weeks, ostensibly buying on the recent dip. The index is down about 15 percent since highs on May 23, but is still up more than 24 percent this year to date. In Hong Kong, the Hang Seng edged up just 0.01 percent, while the S&P/ASX 200 climbed 0.26 percent.

Markets also advanced in Europe in mid-day trading on Tuesday. European equities have been volatile and trading has been somewhat erratic over the past few weeks. Germany’s DAX was up 0.47 percent, London’s FTSE 100 was up 0.66 percent, and the STOXX 50 index was up 0.66 percent.

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U.S. futures at 8:55 a.m.: DJIA: +0.09%, S&P 500: +0.23%, NASDAQ: +0.32%.

Here are three stories to keep an eye on:

1) U.S. Trade Deficit Widens Slightly: The U.S. Bureau of Economic Analysis reported on Tuesday morning that the international trade gap widened slightly from -$37.1 billion in March to -$40.3 billion in April. The gap was less than the -$41.2 billion expected by economists. April exports increased $2.2 billion, while imports increased $5.4 billion.

Trade

U.S. Bureau of Economic Analysis

2) Weekly Retail Sales Soar: Store sales increased 1.9 percent on the week and 4.3 percent on the year for the week ended June 1. The ICSC-Goldman Store Sales Report suggests that pent-up demand and successful spring-time sales are to credit, but that the strength is unlikely to last through the next few weeks as summer sets in.

The ICSC-Goldman report measures comparable-store sales at major retail chains, and accounts for roughly 10 percent of total retail sales. It is used as an indicator for the health of consumer spending.

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3) Europe Watches For Deflationary Pressure: At the end of May, Eurostat reported that euro area annual inflation was expected to climb from 1.2 percent to 1.4 percent in the month. The expected increase helped curb some fears about deflation, but there is still downward pressure in the pipeline. A report released on Tuesday showed that industrial producer prices decreased by 0.6 percent in the EA17 and by 0.7 percent in the EU27. Prices are down by 0.2 percent on the year in both regions.

The decline is nearly twice what economists were expecting, and the annual rate is the first negative reading in over two years. Energy prices led the drop at -1.6 percent. Excluding energy, prices are down just 0.2 percent sequentially and are actually up 0.6 percent on the year. This downward pressure makes it more likely that the headline inflation rate in the euro zone, the HICP, will decelerate in April.

EuroAreaPPI

Source: Eurostat

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