Markets Wait for Clarity Following Trump Inauguration

European stock markets are moving sideways with investors holding back ahead of the inauguration of President elect Donald Trump. DAX and FTSE are little changed after a mixed session in Asia, where Chinese shares were underpinned by a strong GDP number and Japanese markets also managed to close in positive territory, but overall trading was cautious with investors clearly waiting for clearer signals from Trump. A slump in U.K. retail sales initially added to pressure on stocks, but in the end actually helped the FTSE 100 to recover early losses, as the weak number added fresh pressure on GBP. Eurozone peripherals are marginally outperforming after Draghi confirmed the ECB’s easing course going ahead, but gain, overall moves have been very contained today.

WTI futures are up for a second day, presently with a 1.2% gain at $52.65. The rise come with most crude market pundits expecting this weekend’s meeting of key OPEC and other oil producing nations to affirm an effective level of compliance in adhering to agreed supply cuts. This has helped offset EIA data showing a draw in U.S. inventories in the latest reporting week.

German PPI Jumped 1% in December

German PPI inflation jumped to 1.0% year over year in December from 0.1% year over year in the previous month. The sharp acceleration in import price inflation previously and the pick up in HICP were clues that this number would be elevated. Still, the numbers serve to highlight that the rebound in inflation is well and truly underway, even if producer prices remain the main driving factor so far. Indeed, the breakdown showed that energy prices were up 0.2% year over year, after falling -1.7% in the previous month, while non-durable goods prices jumped 2.1% year over year, after 1.5% year over year in November. With growth continuing strong, however, and the labor market looking very tight, while house price inflation is also picking up sharply, the risk of second round inflation effects are rising at least in Germany, although for now that doesn’t seem to impress Draghi.

UK December retail sales unexpectedly contracted 1.9% month over month and undershot the year over year comparison at +4.3%. The respective median forecasts had been for 0.2% month over month and 6.9% growth. The monthly decline is the sharpest since 2011. The data is a concern as consumer spending has been driving economic growth in the UK, and while this may be a dip in an otherwise strong trend.