Stocks climb as retail sales data dispels US growth worries

LONDON — Stock markets mostly rose on Thursday, with strong retail sales data dispelling worries about the strength of the US economy.

Retail sales in the United States soared past analyst expectations in July, climbing by 1 per cent, data showed.

A weaker than expected labour market report recently sparked market turmoil as it raised fears that the world's biggest economy was in worse health than anticipated.

"Today's news has been like turning on the light in a dark bedroom to discover that there are no scary monsters under the bed after all," said Briefing.com analyst Patrick O'Hare.

Wall Street's main stock indices opened sharply higher and the dollar rose more than one percent against the yen after the retail sales data was released.

Concerns that the US Federal Reserve had waited too long to begin cutting interest rates have seen speculation rise that it could cut even deeper than a quarter point reduction at its next meeting in September.

But economist Michael Pearce of Oxford Economics said the retail sales data "signal continued resilience" and would keep the Federal Reserve on a path of gradual rate cuts "because fears about the health of the economy that could justify a larger cut appear unfounded".

Wednesday's consumer price index data — the smallest 12-month increase since March 2021 at 2.9 per cent — solidified expectations that the Fed would cut in September.

Shares in retail giant Walmart rose 7.2 per cent after it reported a rise in revenues and raised its outlook for the year.

Given its vast size and presence across the United States, Walmart's earnings are closely scrutinized for signs of the broader health of US consumers.

London's FTSE 100 stocks index rose 1 per cent amid rising expectations that the Bank of England will cut interest rates further after the nation's economic output slowed slightly in the second quarter.

Britain's economy grew 0.6 per cent in the April-June period, down from 0.7 per cent in the first three months of the year, official data showed on Thursday.

Paris and Frankfurt stocks were also solidly higher in afternoon trading.

Asia's main indices rallied, taking their cue from Wall Street gains on Wednesday's slowing inflation data.

Markets were also digesting positive growth figures from Japan — with the world's fourth-largest economy reporting a better-than-expected GDP rise of 0.8 per cent for the second quarter.

Shares in Alibaba rose 1.6 per cent in New York trading despite the Chinese e-commerce giant reporting a 29 per cent fall in quarterly profit to $3.3 as it battles sluggish consumption during an economic slowdown.

Alibaba runs some of China's most popular e-commerce apps and its performance is widely considered an indicator of broader economic trends.

Data out of China showed the country's industrial production slowing and unemployment rising in July.