Wall Street managed to close higher

7 July, 2016

Wall Street managed to close higher

FX News Today

European Outlook: Wall Street managed to close higher, Asian markets are mixed, with Japan still under pressure, but Hang Seng and ASX 200 moving higher, despite S&P cutting Australia’s credit rating. FTSE 100 futures are also up and the DAX seem to be set for opening losses, with positive leads from Wall Street helping European markets to finally bottom out. Brexit will remain a major risk factor though not just for the U.K. and the Eurozone is also struggling to cope with the fallout as Italy’s banking sector remains in focus. The European calendar has May production data from the U.K., which will be too backward looking to change the outlook. Switzerland has June inflation data, expected to fall to -0.5% y/y from -0.4% y/y.

FOMC Minutes: Almost all officials saw increased uncertainty due to the “surprisingly weak” May jobs report, though there were mixed views on what the data were implying. The minutes showed some thought the slowing understated the pace of job growth, while some worried it might signal a broader slowdown. Many were reluctant to change their overall outlook materially on that one data release. Officials also thought it was prudent to wait for the outcome of the UK referendum, while there was some concern noted over China’s FX policy. Some members argued against delaying a rate hike, which was the eventual outcome of course, and doubted whether conditions would improve sufficiently to warrant a hike. Indeed, a “couple of members” wanted more evidence that economic growth was “strong enough to withstand a possible downward shock to demand and that inflation was moving closer to 2%.” Others argued against waiting too long to hike rates again. The minutes continue to underscore the increasingly cautious stance of the FOMC.

Brexit Aftermath: Another THREE property funds suspend redemptions; this follows the big three of M&G, Standard Life and Avia earlier in the week, a clear trend in danger of snowballing. The whole UK commercial property fund sector worth 25bln GBP is grinding to a halt. This will have potential ripples through to further foreign capital withdrawals and other sectors of the property market.  Additionally footfall in UK shops is down, there has been a sharp drop in both business and consumer confidence (as gauged by post-June 23 surveys by YouGov CEBR), house prices look to be coming under pressure, and there are signs of significant slowing in automobile sales. It has become clear that the UK “independence” will likely come at a cost of a permanent downward shock to its terms of trade as the EU has made it quite clear that the UK won’t be able to have unfettered access to the single market on the terms it seeks. On the external front, bank shares have been hit hard across Europe and there are particularly concerns about the Italian banks. Politically, the EU itself may be facing an existential threat. Against this backdrop, sterling is trading nearly 14% below the highs seen on June 23, and the FTSE 250 (which is a better gauge on the UK economy than the FTSE 100) is down 9.7% while Gilt yields are at record lows. More of the same looks likely.

German production slump points to weak Q2. German production slumped -1.3% m/m in May. Much more than anticipated and led by sharp declines in capital goods and durable consumer goods production. Both were strong in April, so this is somewhat of a correction, but nevertheless, the sharp slump, coupled with the fact that manufacturing orders also decline in May suggests weakness ahead. .hat growth slowed down in the second quarter was widely expected, but hopes were for a rebound in the second half of the year and while confidence indicators seemed to back this view, the Brexit fallout may mean that may not materialise as uncertainty about the outlook will mean caution and reduced investment, also in the Eurozone.

Main Macro Events Today        

US Weekly Claims   US Initial Jobless Claims data for the week of July 2 is out today and should reveal a headline increase to 270k (median 270k) from 268k last week. Claims should set a 267k average in July from 276k in May and 259k in April. As we move through auto retooling season claims are typically more volatile and we expect this to continue to be the case despite an apparent shift towards an earlier start to auto retooling.

Canada Ivey PMI  We expect the Ivey, due today, to improve to 51.0 in June from 49.4 in May. The pull-back in May left the Ivey at the weakest level of the year, and was below the most recent foray into contractionary (sub-50) territory in December of 2015 that saw the index fall to 49.9. But while the magnitude of the decline in May was unexpected, it was not shocking given the Fort McMurray fires during the month, and the concerns about the outlook for the region and the impact of stopped oil production on the national economy.


Source link  
US reports revealed modest upside surprises for December trade

Asian stock markets mostly moved higher overnight, with Nikkei and Topix was trading close to levels last seen in December 2015 as the Yen weakened...

The global stock rally continued in Asia overnight

Reuters reported, the fast-growing financial technology (Fintech) sector could hold big “systemic risks” for the banking sector and the broader economy which need to be addressed by bank regulators around the world, Bank of England Governor Mark Carney said on Wednesday...

Too-strong a dollar may hurt the economy

Japanese stock markets moved higher, led by Japanese bourses as the country managed to snap a 14-month long run of falling exports, which helped the Nikkei to close with a 1.4% gain...


Dollar found its feet after declining over the last day

Asian stock markets were mixed overnight, with Japanese bourses still under pressure (Nikkei closed down 0.55%). despite a dip in the Yen, as USD stabilised. Uncertainty over Trump’s regulatory and trade policies continues to weigh on investor sentiment...

The dollar has settled moderately lower

Asian stock markets were mixed overnight, after U.S. and European shares closed in the red Thursday. Japan and mainland China bourses managed to move higher (Chinese GDP beat expectations at 6.8%)...

Stock markets continued to stabilise

German HICP confirmed at 1.7% y/y, as expected, with prices up 1.0% m/m. The sharp acceleration from just 0.7% y/y in November was mainly due to base effects from lower energy prices and the breakdown showed that prices for heating oil jumped 21.9% y/y in December...


ECB policy was focused on avoiding deflation trap

Asian stock markets were mixed, with Japan and ASX heading south amid reports that U.K. Prime Minister May will announce plans for a hard Brexit at today’s keynote speech. Yen strength is also continuing to put pressure on the Japanese markets...

U.S. markets are closed Monday

U.S. markets are closed Monday for Martin Luther King Day. This will be a busy week for traders, with the inauguration of president-elect Trump on Friday headlining...

The dollar is trading softer into the London open

Aftershocks from President-elect Trump’s campaign-like press conference, which had weighed on global stock markets and yields started to recede late in the U.S. session and U.S. equities managed to recover part of their losses...

  


Share: