US open: Markets slide on Friday as retail sales rise

US markets opened marginally lower on Friday, amid an expected fall in import prices.

US import prices recorded their biggest drop in nine months in August, according to figures released on Friday by the Labor Department.

Food prices were on the rise but a marked decline in the cost of petroleum products, the biggest fall since November, kept a lid on imported inflation pressures, as import prices fell 0.9% in August after losing 0.3% in July and were in line for the consensus.

A relatively sluggish global demand and a strong dollar also contributed to control imported inflation and, coupled with a slow wage growth, should give the US Federal Reserve a bit more time to retain its current monetary policy.

Retail sales, meanwhile, rose sharply in August with figures released from the Commerce Department showing that retail sales rose to a seasonally adjusted 0.6% in August, the largest increase since April.

Core retail sales rose 0.4% month-on-month, one-tenth below consensus expectations, while July retail sales were revised higher to a 0.3% increase.

In corporate news, Ulta Salon Cosmetics & Fragrance shares soared after the beauty products retailer raised its outlook late on Thursday and reported that both sales and earnings grew in the second quarter, while Darden Restaurants registered a small leap forward thanks to quarterly results that were above expectations.

Alliance Data Systems (ADS) and Conversant were both on the rise after ADS announced late on Thursday that it will acquire the digital marketing firm for $35 a share in a deal worth about $2.3bn, while Health Care shares dropped early on, after the firm announced an offering of 15.5m shares late on Thursday.

The dollar climbed to a six-year high against the yen and it also registered small gains against the pound and the euro.

Analysts at Capital Economics said that even a further rise in the dollar above its current four-year high won’t prevent a period of higher inflation and stronger gross domestic product (GDP) growth.

“It would be odd to conclude that the dollar will significantly weaken economic growth when it is the stronger economy that’s pushing it higher in the first place,” Capital said in a note to investors.

“The dollar’s strength stems from the growing divergence between the economic and policy outlooks in the US and elsewhere.”

West Texas Intermediate crude futures dropped 0.24% to $92.60 per barrel, according to the ICE.