Dollar drops on US retail data, stocks rebound

Stocks gained as positive economic data from China lifted mining shares after a day of market turmoil sparked by the latest shakeup in the Trump administration.

The dollar edged lower after disappointing US retail sales figures.

S&P 500 Index futures advanced as the Stoxx Europe 600 Index reversed some of Tuesday’s 1% drop, with raw-material producers outperforming after factory output and investment growth in China unexpectedly accelerated.

Benchmarks dropped across Asia earlier after the sudden firing of US Secretary of State Rex Tillerson. The euro erased a decline spurred by Mario Draghi’s comment that recent gains weren’t all warranted by economic fundamentals.

Treasuries were steady, and crude oil rose above $61 a barrel.

The Chinese data boosted most industrial metals, with copper heading for a two-week high. That helped lift investors’ spirits after a day in which US political risks rocked markets from Europe to Asia.

Today’s US data showed retail sales unexpectedly dropped in February even as wholesale prices increased, clouding the policy outlook ahead of the Fed’s meeting next week.

Meanwhile, Draghi said in a speech the euro’s recent gains were due to more to external factors than euro-area economic growth, and might weigh on inflation. The European Central Bank president also noted that adjustments to monetary policy will remain predictable as policy makers look for further evidence that inflation is moving in the right direction.

Tillerson’s ouster raised concerns of a new guard in the White House that may take a harder line on trade, advancing President Donald Trump’s agenda of imposing tariffs. Trump nominated CIA director Mike Pompeo, an ex-congressman who has endorsed "pushing back against the Chinese threat," to replace Tillerson.

The change comes as the administration considers tariffs on a broad range of Chinese imports, with Politico reporting one proposal is to take measures against more than $30bn of goods a year.

Here are some of the key things happening this week:

Inflation data Thursday is a focal point in the euro area. Also this week, Germany’s Angela Merkel is inaugurated to a fourth term, and EU27 government officials discuss the European Union’s Brexit position. New Zealand GDP data is out Thursday.

The UK is expected to set out retaliation measures today against Russia over a nerve agent attack on its territory. Meanwhile, Russians will go to the polls on Sunday to vote in a presidential election that Vladimir Putin is widely expected to win.

And these are the main moves in markets:

Stocks

The Stoxx Europe 600 Index climbed 0.4% as of 8:39 am New York time. The UK’s FTSE 100 Index rose 0.3% Germany’s DAX Index increased 0.4%. Futures on the S&P 500 Index gained 0.3%. The MSCI Asia Pacific Index fell 0.5%.

Japan’s Topix index dropped 0.5%, Hong Kong’s Hang Seng sank 1%, South Korea’s Kospi lost 0.3% and Australia’s S&P/ASX 200 slid 0.7%.  

Currencies

The Bloomberg Dollar Spot Index dipped 0.2% to the lowest in more than three weeks. The euro declined less than 0.05% to $1.2384. The British pound rose 0.1% to $1.3981, the strongest in more than three weeks.

The Japanese yen climbed 0.2% to 106.40 per dollar.

Bonds

The yield on 10-year Treasuries declined less than one basis point to 2.84%, the lowest in almost two weeks. Germany’s 10-year yield climbed less than one basis point to 0.62%. Britain’s 10-year yield dipped one basis point to 1.49%.

Japan’s 10-year yield fell less than one basis point to 0.05%.

Commodities

West Texas Intermediate crude climbed 0.8% to $61.21 a barrel. Gold gained less than 0.05% to $1 326.49 an ounce, the highest in more than a week. LME copper climbed 1.5% to $7 047.00 per metric tonne, the highest in more than two weeks.