European Shares are Mixed Despite Strong UK Retail Sales and Italian IP

European stock markets are mixed with the FTSE underperforming and printing in the red, while the DAX is just barely above water. Stocks still moved higher in Asia overnight, led by a 1.48% gain in the Hang Seng with investors chasing underperformers and a 0.57% rise in the Nikkei underpinned by exports, which benefited from a weaker Yen. In Europe though the impact of calming comments from ECB officials over the weekend seems to be waning as stronger than expected U.K. BRC retail sales numbers and Italian production numbers acted as a reminder that central banks are still eyeing exit steps, even if things may stay calm over the summer. And with bond markets selling off and yields resuming their uptrend, equity markets are struggling.econ

Italian industrial production bounced back 0.9% month over month in May, after falling -0.4% month over month in the previous month. A stronger rebound than median expectations, but tying in with robust German and French numbers and confirming that industrial production is back on track after the Easter period. the three months trend rate improved to 0.2% from 0.0% and the working day adjusted annual rate rose to 2.8% from 0.9%. More signs then that Eurozone growth remained strong in the second quarter.

S&P Says UK is Not Ready for Rate Hike

S&P says the UK won’t be ready for a rate hike until mid-2019, stressing that Brexit-related uncertainties have and will continue to reduce economic growth. The agency forecasts UK growth at 1.4% for this year, and believes the BoE’s ultra-accommodative monetary policy will persist over the medium term, even though three of the eight-member MPC voted for a 25-basis point repo rate hike at the June policy meeting.

U.S. consumer credit surged $18.4 billion in May, following the upwardly revised $12.9 billion April gain which was $8.2 billion. Non-revolving credit continued to lead the strength, rising $11.0 billion versus $11.8 billion previously which was revised from $6.7 billion. Revolving credit increased $7.4 billion after edging up $1.2 billion in April which was revised from $1.5 billion. For Q1, credit climbed $45.5 billion which was revised from $47.5 billion and was up $57.8 billion in Q4 which was revised from $60.6 billion.

Canada’s Financial Minister said the economy is “firing on all cylinders.” Morneau noted the real estate market is beginning to level off. As always, he refrained from commenting on the upcoming rate announcement from the BoC, saying that is the BoC’s “responsibility.” He was upbeat on the economy, saying that as it does better it puts people in a better situation to face whatever the challenges arise. The market is pricing in around a 90% chance of a 25 basis point rate hike on Wednesday.