Markets drift after mixed US retail sales data
LONDON (AP) - A mixed set of United States retail sales data did little to alter the cautious mood in markets on Friday as investors geared up for next week's crucial meeting of the US Federal Reserve. Ongoing uncertainty over Syria also kept a lid on sentiment.
Though retail sales in August rose by a monthly 0.2 per cent, half the rate anticipated in the markets, the previous month's gain was doubled to 0.4 per cent. Retail sales are considered an important measure by investors as they account for around 70 per cent of the US economy.
Though the gains are hardly spectacular, analysts said it still remains likely that the Fed will start reducing its stimulus at the end of its two-day policy meeting on Wednesday. Currently, most analysts expect the Fed to begin "tapering" its stimulus by US$10 billion (S$12.7 billion) a month. The Fed has been buying US$85 billion in financial assets every month in an attempt to keep a lid on borrowing rates and boost lending. Most economic indicators have suggested that the US economy, the world's largest, is healing.
"Today's retail report is unlikely to tell the Federal Reserve anything new regarding the health of the economy," said Mr Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. "The momentum towards full recovery remains intact and is unlikely to stall the Fed's desire to scale back its level of bond purchases."