Daily Briefing – Monday, May 15, 2017
The European Commission published its Spring Economic Forecast last week, which casts a shadow over central bank projections downgrading inflation and chances of a reduction in asset purchases. European indexes ended up last week, the Eurostoxx +0.3%, the Dax 0.47% and the CAC 0.41%. The FTSE (+0.66%) posted a record high as the GBP fell following a decision by the Bank of England to hold interest rates steady at 0.25%, with 1 member breaking the consensus. Meanwhile, Germany’s Q1 GDP shows an annual growth of 2.4%, outpacing the US, the UK, Japan and Italy. Eurozone industrial production, on the other hand, was down by 0.4% to 1.9.
Stock markets across the region ended down on Friday, tracking US data. They were up overnight, however, except for the Nikkei, which closed very slightly in the red after considerable losses in Toyota, Honda and Sony, and the Yen gained nearly 1/10th% over the weekend. This morning’s data from China shows a weakening economy across the board, with industrial production and urban investments down and retail sales only marginally up. Once again, the property bubble seems to be expanding and the central bank may have to once again tighten conditions. Chinese stocks are strengthening, however, on expectations of international infrastructure spending, after President Xi Jingping pledged $78bn in global projects financing.
The US suffered a weekend blackened by weak data on Friday, as retail sales, business inventories and consumer inflation came in lower than expected, the last at its weakest since September 2015. The Dow and S&P also closed in the red, with the Nasdaq up less than 1/10th of a percent. Analysts have been looking at the tuition and car loan market lately noticing that nearly a third of loans are sub-prime.
Oil was brightly up this morning in spite of the US oil rig count, which showed a 17th straight week of increasing US production on continuing hopes of a freeze extension next Thursday that will include additional signatories, such as Egypt and Turkmenistan. Plans could fall apart, however, due to continued tension between Saudi Arabia and Iran, and the headwind of non-signatories like the US who continue to ramp up production, maintaining downward pressure on prices. Prices jumped overnight by 1.5% after Russian and Saudi oil ministers said that they would extend the cut by a year. And gold notched its 3rd straight day of wins for the first time in a month as US data Friday disappointed investors.
This week, expect quarterly earnings results from Vodofone (FTSE) on Tuesday and Cisco and Alibaba (NYSE) on Thursday. And Spotify has announced it will be going public this year. Recently tagged at $13 billion, the music streaming service will be the first to list directly, i.e. without an underwriting bank/broker to allocating shares to investors.
|8 AM GMT||Italy: CPIs|
|9 AM GMT||Greece: GDP|
|12:30 PM GMT||US: Empire State Manufacturing Index followed at 2 by the NAHB Housing Market Index|
|1:30 AM GMT (+1)||Australia: RBA meeting minutes|