Dollar Rallies On U.S. Data, Stocks Trade Flat

The dollar rallied on Friday, helped by unexpectedly strong U.S. retail sales data, but global equity markets traded flat after a hefty run-up over the past three weeks put a damper on big gains in the near term.

U.S. retail sales rose 0.5 percent in October after stripping out volatile gasoline and food services. The dollar index touched its highest since June 2010 at 88.267, but later pared gains to be down 0.15 percent at 87.540.

MSCI’s all-country world index edged up 0.13 percent, while Wall Street closed mixed near flat.

European shares fell, according to one measure, as mixed euro zone growth data showed the French and German economies growing marginally but others like Italy still firmly in recession.

The pan-European FTSEurofirst 300 index closed down 0.1 percent at 1,345.20.

Stocks on Wall Street mostly traded slightly lower. The benchmark S&P 500 index has gained 12 percent and MSCI’s ACWI has gained 8 percent from their respective lows three weeks ago.

Philip Orlando, chief equity market strategist at Federated Investors in New York, said stocks were dramatically oversold in mid-October, and that data on Friday confirmed in his mind that holiday sales at year’s end will be “pretty good.”

“The market at this point, as a forward-looking discounting mechanism, has started to price some of the good news in,” Orlando said. “We’ve seen the lion’s share of the move. Now we just sort of grind higher,” he said.

Other data showed U.S. consumer sentiment rose to a seven-year high this month, another positive sign for spending during the holiday shopping period.

The Dow Jones industrial average closed down 18.05 points, or 0.1 percent, to 17,634.74. The S&P 500 rose 0.49 point, or 0.02 percent, to 2,039.82 while the Nasdaq Composite added 8.40 points, or 0.18 percent, to end at 4,688.54.

For the week, the Dow and S&P 500 gained 0.4 percent, while the Nasdaq rose 1.2 percent.

The euro rebounded against the dollar to trade 0.38 percent higher at $1.2523. Earlier, it briefly slipped below $1.24 at $1.2399.

The Japanese yen touched a seven-year low against the dollar, at 116.82 yen, immediately after the release of the U.S. data. The yen was last at 116.25, or 0.40 percent lower.

Crude oil rose on buying support after a stretch of weekly losses that took prices to 2011 lows, but oversupply concerns made analysts skeptical of whether the rebound would continue.

Brent hit an intra-day low of $76.76, the lowest since September 2010, before climbing back up to settle at $79.41, or $1.92 a barrel higher.

U.S. crude rose $1.61 to settle at $75.82.

U.S. short-dated Treasuries prices dipped but longer-dated Treasuries prices rose as some buyers stepped in to pick up higher U.S. yields. Benchmark 10-year U.S. Treasury notes rose 6/32 in price to yield 2.3222 percent.

Euro zone bond yields fell after data showed modest and patchy third-quarter growth in the currency bloc, keeping intact bets for more European Central Bank easing.

German 10-year yields slipped 1 basis point to 0.79 percent, just above record lows of 0.716 pct hit last month.

Source : Reuters