By James Langton
(August 11 – 09:15 ET) – U.S. retail sales for July came in up 0.7%, 0.6% ex-autos. Economists were expecting both numbers to post a 0.4% gain. Normally this would likely be negative for stocks. However the Producers Price Index came in on target, unchanged on the headline, with the core number up 0.1%. This persistent lack of inflation despite strong underlying economic activity will probably keep interest rates unchanged economists expect. Next week’s Consumer Price Index numbers will help confirm the picture.
The big news overnight is the Bank of Japan raising the overnight call rate to 0.25%. This action brings to an end to the bank’s zero interest rate policy announced back on February 12, 1999.
In Europe stocks are mixed. The FTSE is down three points to 6,384. The CAC 40 is up nine to 6,571. The DAX has gained 36 points to 7,317.
In M&A news, Barclays plc, Britain’s third-largest bank, is buying Woolwich plc for £5.4 billion (US$8.1 billion).
In other business news, it was also announced that Goldman Sachs, Merrill Lynch & Co. Nikko Salomon Smith Barney and Nomura Securities Co. were hired to arrange the US$12 billion privatization of Nippon Telegraph & Telephone Corp., which will be one of the world’s biggest public offerings.
The Japanese market rose overnight to 16,117, a 142 point increase. Traders were buoyed by the interest rate move, which showed confidence in the economy and confirmed the independence of the new monetary policy head. The Hang Seng dropped 119 to 17,214.