World Week Ahead: US retailers, retail sales

With Wall Street at record highs, investors this week will scrutinise earnings from companies including Nordstrom as well as US economic data such as the latest retail sales.

The outcome of France's presidential elections might offer a boost to the euro.

Last Friday, a Labor Department report showed that US employers added 211,000 jobs in April, more than economists expected, following a downwardly revised 79,000 gain in March.

The unemployment rate declined to 4.4 percent, the lowest in almost a decade.

"Labour market conditions remain robust and continue to tighten," Ward McCarthy, chief financial economist at Jefferies in New York, told Bloomberg. "This data will keep the Fed on track for a preferred 2017 normalisation timeline of rate hikes in June and September and the first step toward balance-sheet normalisation in December."

Investors will eye this week's speeches by Fed officials for any fresh clues about the timing of the two hikes the central bank has signalled for the remainder of the year.

The Fed's James Bullard and Loretta Mester are set to speak today, followed by Eric Rosengren and Robert Kaplan on Tuesday, William Dudley on Thursday, as well as Charles Evans and Patrick Harker on Friday.

The latest economic data slated for release this week include the labour market conditions index, due today; NFIB small business optimism index, JOLTS, and wholesale trade, due Tuesday; import and export prices, and Atlanta Fed business expectations, due Wednesday; weekly jobless claims, and producer price index, due Thursday; as well as consumer price index, retail sales, business inventories, and consumer sentiment, due Friday.

For the week, the Dow Jones Industrial Average rose 0.3 percent, while the Standard & Poor's 500 Index gained 0.6 percent, and the Nasdaq Composite Index climbed 0.9 percent. Both the S&P 500 and the Nasdaq closed at record highs on Friday.

"People have shifted so quickly into bonds, and they're probably doing it by selling equities," Alex Bellefleur, head of global macro research and strategy at Pavilion Global Markets in Montreal, told Bloomberg. "Maybe people are looking at protection, given stocks are at all-time highs."

Among the US companies reporting their latest results in the coming days are Macy's, Nordstrom, Kohl's and JC Penney. Of those four, only Nordstrom is forecast to post an increase in earnings per share, according to Reuters.

"There's a lot of headline risk attached to retailers so we're not a big fan of owning a lot of the brick and mortar mass retailers right now," Nathan Thooft, senior managing director at Manulife Asset Management in Boston, told Reuters.

In Europe the Stoxx 600 Index rose 0.7 percent on Friday to bring its gain for the week to 1.9 percent.

Investors have bet that Emmanuel Macron will win Sunday's final French presidential vote, beating populist anti-euro rival candidate Marine Le Pen.

France's CAC 40 Index closed at the highest level in nine years on Friday.

"Investors breathed a sigh of relief after Emmanuel Macron claimed the largest share of the vote in the first round of the French presidential election, and there is scope for a further rally if he wins the run-off handsomely on Sunday," Capital Economics analysts said in a note on Friday.

(BusinessDesk)