Daily Market Commentary 17th August 2022

US share markets continued to rally strongly, inspired by some strong earning numbers, released by Retail giants Walmart and Home Depot. The retail sector was expected to suffer from flagging disposable income as inflation hits cost-of-living. Higher prices and margins may have assisted the earnings, as markets keenly await the US Retail Sales number, due for release tonight. The important German ZEW Economic Sentiment report, crashed into deeply negative territory, falling to minus 54.9! Conditions in Europe continue to deteriorate, as the energy crises smashes economies and the consumer hard. The EUR drifted to 1.0150, while the GBP fell to 1.2080, ahead of the release of key inflation data.

The RBNZ is expected to announce a further rate rise today, increasing 50 basis points, to 3%. Inflation is hitting the consumer hard in NZ and PPI numbers, released today may reflect, input cost rises. Markets will also look closely at Japan’s Tankan report, which is expected to show deeply negative sentiment. The AUD is threatening to break below 0.7000, while the NZD fell below 0.6350, ahead of the RBNZ meeting.