Daily Briefing – Monday, May 8, 2017
European equities are jumping for joy this morning following French election results that place Emmanuel Macron – a French banking darling and former Rothschild Bank employee – well ahead of his rival, Frexiteer advocate Marine Le Pen. Meanwhile, European Commission President Jean-Claude Juncker is currently under attack from both the German Chancellor Angela Merkel and the president of the European Council, Donald Tusk for his diplomatic gaffes regarding Brexit. Tusk has called Juncker’s behavior incompetent, while Merkel was angry that his comments had been leaked. German factory orders this morning were up 1%, a third of March’s figure but slightly better than expected; and the construction PMI fell by 2 points to 54.6 in April. And the GBP is already showing signs of strength ahead of Thursday’s BoE interest rate decision.
Stock markets in Asia started the week with a post-French-election uptick, led by the Nikkei with a 2.3% jump, followed by Korea’s Kospi at 2.2%. China’s foreign exchange reserves soared for the 3rd month in a row and are now at over $3 trillion. Most analysts do not believe, however, that the government will at this point roll back capital control regulations, aimed at preventing foreign capital outflow. And the nation’s trade balance widened by 30% to $38 bn, as both exports and import increases fell by nearly half. In Australia, building permits released overnight were substantially down by 13% after February’s 9% increase. Business sentiment is up to a 6-year high.
Indexes were up by ¼ to ½ a percent as markets closed Friday after optimistic jobs data. The NFP nearly tripled last month’s dismal data and soared above expectations to 211,000, and unemployment fell even lower to 4.4%. The numbers make a June interest rate hike now almost a certainty. On the other hand, the US Treasury in its weekly statement Thursday said that income from individual income and employment taxes were down 5.7% YoY – their lowest in 5 years.
Gold experienced an $8 weekend gap as French election results came in Sunday. It immediately recovered and was trending in the 12-30 zone as the week began – last week’s resistance now serving as a support level. And oil, after experiencing sharp declines last week, started the week optimistically on hopes of a production freeze extension.
Wednesday marks the first quarterly earnings result for Snapchat since its IPO in March. Shares are up 9.6% in the past month, but the company faces tough competition from Instagram Stories and Facebook’s new Snapchat-like features. Expected EPS should be -$0.21 with revenue up from $38.8mn to $157.8 mn. Finally, five years after he began buying IBM stock, Warren Buffet has dumped a third of it, the announcement pushing value down another 3%.
|7:30 AM GMT||UK: Housing Prices|
|8 AM GMT||EU: Sentix Investor Confidence|
|2 PM GMT||US: Labor Market Conditions|
|1:30 AM GMT (+1)||Australia: Retail Sales:|