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UK Retail

Retail sales in the United Kingdom increased by 1.9 percent in January, compared to the expected increase of 1.0 percent.

• Previous figure of -3.7 percent was revised to -4.0 percent.

• Retail sales increased by 9.1% year on year, compared to the expected 8.7% increase.

• Previously, -0.9%; revised to -1.7%

• Retail sales (excluding fuel) increased by 1.7 percent, compared to the expected 1.2 percent increase.

• Previously -3.6 percent; now -3.9 percent

• Retail sales (excluding fuel) increased by 7.2 percent, compared to the expected 7.9 percent increase.

• Previously -3.0 percent; revised to -3.8 percent

Following the omicron impact in December, retail sales activity increased to begin the new year, with non-food store sales volumes increasing by 3.4 percent month on month. This is offset by the first time that food store sales volumes have fallen below pre-pandemic levels (seen 0.8 percent below levels in February 2020). Overall, retail sales volumes were 3.6 percent higher than pre-pandemic levels in February 2020.

The data simply confirms a rebound in economic activity, which was expected following the hit in December due to the spread of the omicron variant at the time. In general, economic conditions should continue to support the BOE narrative of tightening monetary policy in the coming months.

Kremlin

The situation in Donbass is potentially very dangerous, and news from the region is concerning.

Russia’s military exercises are completely transparent, according to the Kremlin Putin will most likely be in Russia’s “situation centre” to oversee drills.

These drills are impossible to conduct without the president’s participation; no further comment on specifics.

Despite all of the talk of withdrawing military forces, one could argue that Russia will want to maintain a sense of danger throughout the situation. They’ve already made their point in the last two weeks or so, but Putin wants to keep his options open in case something goes wrong.

Oil

• Oil is on track for its first weekly loss in nine weeks as Russia-Ukraine mood music improves. WTI is down more than $2 on the day to $89.75 After eight weeks of gains, the oil market could be in for a long period of correction.
• Oil peaked at $95.79 this week on the back of Russia-Ukraine tensions, but as headlines in the past few sessions show promising signs of hope, we are seeing oil prices drop quite a bit on the day.
• The price of oil has dropped by more than 2% to $89.75, and there isn’t much support for it until we reach the 8-9 February lows of $88.44-53.
• After that, the 23.6 retracement level at $87.92 will be the next important level to monitor.
• If nothing else, a deep correction here has the potential to run all the way to the 38.2 retracement level at $83.06 or even the 100-day moving average (red line). This would result in some enticing levels for dip buyers to scale back in for the long haul.

European equities

European equities are slightly higher to begin the day. As we enter European trading, the market is feeling more optimistic. Eurostoxx is flat, Germany DAX +0.1%, France CAC 40 +0.1%, FTSE 100 +0.3% & IBEX 40 +0.3%.  

The gains in Europe are more muted, but the general mood in the market is more upbeat following news that Blinken and Lavrov will meet next week.

S&P 500 futures are up 0.5 percent, Nasdaq futures are up 0.5 percent, and Dow futures are also up 0.5 percent at the moment.