The return of capital from defensive havens to risk markets has accelerated overnight after North Korea backed away from its threat to attack Guam.
Precious metals and the Japanese yen are selling off on the news, with silver down 1.5%, gold down 0.8%, and the USD/JPY has popped back up over 110.00. Stocks are also climbing, led by a 1.1% gain for the Nikkei, which got some help from stronger than expected Japanese industrial production. The FTSE and DAX are up 0.4%, while U.S. index futures are up 0.2%.
It's also a big day for trading in sterling, which has been slammed downward following the release of weaker than expected inflation numbers. Steady or falling inflation undermines the hawkish case and makes it less likely BOE Governor Carney will raise interest rates any time soon. GBP is down sharply against both USD and EUR today.
There is more going on in North America today as well. Home Depot (NYSE:HD) beat the street on earnings and issued positive guidance. This news, along with strong earnings from Canadian Tire (TO:CTCa) last week, suggests that the Amazon (NASDAQ:AMZN) challenge killing mall-based retailers may not be having as big an impact on big box stores. It also suggests a positive environment for home improvement retailing. On the other hand, Coach (NYSE:COH) beat the street by a penny but guided below expectations.
These results set the stage for today's U.S. retail sales report, which may give an indication of consumer spending trends. With July auto sales having already been reported as really weak, the headline versus ex-auto split could be significant.
In Canada today, existing home sales may give a better idea on how much the Toronto housing market has slowed of late. The start to NAFTA talks tomorrow may impact trading in the loonie and selected stocks. Yesterday, forest stocks sold off, with softwood lumber likely to be a key point of contention – again. Any pronouncements or tweets from U.S. President Donald Trump or other top U.S. officials could have a significant influence on sentiment.