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Hope is on the ascendency! (Thursday, October 17, 2019)

Global stocks barely moved on Thursday as soft U.S. retail sales data raised concerns about the health of the world's largest economy and risk of global recession, while sterling was volatile as negotiations on a Brexit deal continued. Both MSCI's broadest index of Asia-Pacific shares outside Japan and Japan's Nikkei were little changed in early trade while U.S. stock futures lost 0.15%. The S&P 500 shed 0.20% the previous day after data showed U.S. retail sales contracted in September for the first time in seven months, in a potential sign that manufacturing-led weakness could be spreading to the broader economy.

Given U.S. consumption has been one of few remaining bright spots in the global economy, the data fanned worries about a global recession. U.S. Treasury Secretary Steven Mnuchin said on Wednesday that U.S. and Chinese trade negotiators were working on nailing down a Phase 1 trade deal text for their presidents to sign next month. But he also said there were no plans for another high-level meeting on the trade deal outlined last week. 

Losses in equities were offset by a solid start to the earnings season, though that is partly because investors have already marked down their expectations substantially, with earnings for S&P 500 companies expected to show a decline of 3% for the quarter. Bank of America shares rose 2.0% following its quarterly results. Netflix rose 9.9% in after-hours trade after its earnings beat Wall Street estimates. In the currency market, soft U.S. retail sales took the shine out of the dollar.

The dollar index fell 0.30% on Wednesday and last stood at 97.964, having touched its lowest since Aug. 27.Against the yen the dollar slipped to 108.73 yen, after peaking at 108.90 on Tuesday. The euro stood at $1.1075, up 0.04% so far in Asia, near a one-month high of $1.1085 hit in U.S. trade on Wednesday. Sterling traded at $1.2823, having risen to as high as $1.2877 on Wednesday, its loftiest level since mid-May.

In one sign of investor caution, in currency option markets, risk reversal spreads in sterling turned in favour of pound puts after briefly favouring pound calls earlier this week, meaning demand to protect the currency's downside is stronger than that for the upside.

The Turkish lira steadied off seven-week lows as U.S. President Donald Trump's sanctions for Turkey's military incursion into Syria were perceived to be lighter than expected. Lira bears also suffered a flashback of their suffocating March squeeze as the authorities moved to keep a lid on volatility by restricting the supply of lira to overseas counterparts. The lira stood at 5.8825 per dollar.

Oil prices eased after U.S. data showed a larger-than-expected build in U.S. crude stocks. Brent crude futures fell 0.82% to $58.93 a barrel while U.S. West Texas Intermediate (WTI) crude lost 1.01% to $52.82 per barrel.