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Daily Briefing – Monday, April 10, 2017

Asia

Following last week’s meeting between Chinese and US leaders, the Financial Times yesterday reported that China is prepared to offer concessions to the US to prevent a trade war, such as better market access for US business. Elsewhere in Asia, stocks ended up led by the Nikkei and a weakening yen, and Australian equities thanks to strengthening commodities, Japan overnight reported a widening current accounts surplus and a 1 trillion yen trade surplus after January’s 853 billion yen deficit. Bank of Japan governor Haruhiko Kuroda told a meeting of bankers that quantitative easing would continue until 2% inflation was achieved.

 Europe

ECB President Mario Draghi also expressed divergent policies with the US Federal Reserve on Thursday, saying that he is not sure when the bank will abandon QE. European stocks also ended higher on Friday following the US airstrike in Syria and a terror attack in Syria. The FTSE led with a 0.63% gain in spite of poor US labor data after Lloyd’s shares fell nearly a percent on news it was setting aside further funds against fraud compensation. UK production figures were also dismal with a goods trade deficit that widened beyond expectations to 12 and a half trillion pounds. And, to top that off, Visa reported this morning that consumer spending in the UK in Q1 has increased at its lowest pace in 3 years. German industrial production beat expectations with a 2.2% rise but the French number showed a decline to 1.6%.

US

Following Friday’s NFP data, the worst since May, Morgan Stanley reports that wage growth in the US may be slowing. Although unemployment has dropped to 4.5%, payrolls fell from 219K in March to 98k – nearly half of expectations. Speaking in Australia, St. Louis Federal Reserve President James Bullard told reporters that the FED may start slowing its spending spree laster this year, which could result in upward pressure on treasury bond yields. Similar sentiments had been voiced Friday by his New York colleague, William Dudley.

 

Commodities

Oil was at a 1-month high on Friday following the US airstrike in Syria in spite of a further 10-drilll increase in the Baker Hughes rig count. WTI is currently edging towards the 52.50 mark and Brent – 55.50. Gold ended high last week but has begun dropping on a strengthening US dollar, following Friday’s data.

Shares

Quarterly earnings season begins next week led by financials. Amongst company shares, Netflix will be reporting on Monday the 17th followed by IBM and Yahoo on Tuesday 18th, and eBay on Wednesday 19th.

 

Week’s Events

8 AM GMT

Italy: Industrial output followed at 9 by wage inflation

12:15 PM GMT

Canada: Housing Starts

8:10 PM GMT

US: Janet Yellen speech follows labor market conditions report at an unspecified time

11:01 PM GMT

UK: BRC Shop Price Index

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