This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning. Following Tuesday’s retail-led rally, stocks and equities futures have been gaining ground all morning. That’s despite fresh concerns about the emerging coronavirus hotspot in Beijing, and mounting cases in America’s Sun Belt, notably Florida and Texas.
Let’s see what’s moving markets.
- Asia is mixed in afternoon trade. The Hang Seng clings to gains (+0.6%) while Japan’s Nikkei sinks (-0.5%).
- China canceled more than 1,200 flights in and out of Beijing in an effort to contain the latest COVID-19 outbreak, which has now stricken more than 130 in the city.
- Japan reported May exports fell by a worse-than-expected 28.3%, showing more damage from the coronavirus hit on global trade.
- The European bourses were flat out of the gates, but perked up throughout the morning. London’s FTSE (+1%) led the way higher.
- There’s no retail relief for Europe’s carmakers. Auto sales fell 57% y-o-y in May, with the U.K. seeing an eye-watering 89% plunge.
- A return to normal is not good news for HSBC staff. The London-based bank will cut 35,000 jobs, Reuters reports, after putting the plan on ice when the pandemic hit earlier this year.
- After the Dow‘s 526-point rally yesterday, stock futures for the bluechip are gaining this morning, pointing to a solid open. Surging retail sales boosted shares broadly yesterday, but they’re far off pre-pandemic levels.
- The U.S. indices closed in the green on Tuesday despite a stark warning from Fed chair Jerome Powell that it will be “a long road back” before the U.S. employment numbers fully recover.
- Now for some good news: Dallas Fed president Robert Kaplan told Bloomberg TV the U.S. economy bottomed out in early May. He’s said this before, but it’s encouraging to see he’s sticking with that call.
- Gold and the dollar are down, though just a tick.
- Crude is mixed. WTI is down on a report U.S. stocks swelled during lockdown.
Shop ’til you drop
Retail sales is as good a metric as any in assessing consumer confidence. The consumer is the engine of the U.S. economy, accounting for roughly 70% of U.S. GDP. And so yesterday’s numbers were an encouraging sign of progress in the long road back to economic recovery.
The markets of course saw the numbers, and took a victory lap—at one point, sending Wall Street 4% higher. There was a lot to cheer. The 17.7% month-on-month jump in retail sales was better than anticipated, and notched a new monthly record. The multiplier effect could be significant. As Berenberg Capital Markets economist Mickey Levy pointed out in an investors note yesterday, “the strong rebound in retail sales in May bodes well for stronger gains in retail employment over the summer after a relatively small rebound in May (+368k increase in May retail employment after a cumulative decline of 2.4m in March and April).”
A closer look at yesterday’s numbers reveals there are still clear winners and losers in the retail sector. Let’s look at the chart, courtesy of Berenberg.
The biggest winner, of course, is the online retailers. They’re represented by the “non store retailers” row at the top, up an impressive 25.4% in the February-to-May period. Grocery stores (+12.8%) and DIY-home-builder stores (+9%) are also in the black over that three-month span. Everything else is down in that stretch.
Who were the big winners last month? Auto dealers and car parts retailers saw the biggest jump. So, it wasn’t just me buying a new set of tires last month. (A car battery, too).
Overall, the +17.7 handle was more than double consensus estimates, showing, to paraphrase my colleague Phil Wahba, the resilience of the American shopper is alive and well. That’s an encouraging sign for the economy as lockdown measures relax further. Wahba quoted Moody’s vice president Mickey Chadha who called the May figures “an astonishing feat.”
The markets certainly felt so.
Have a nice day, everyone. I’ll see you here tomorrow.
A note from my Fortune colleagues on a timely new initiative:
Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here. https://bit.ly/WorkingWhileBlack
As always, you can write to email@example.com or reply to this email with suggestions and feedback.