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Daily Briefing – Thursday, April 6, 2017

US

Equities reacted with shock to yesterday’s announcement by the Federal Reserve’s Open Market Committee that markets were over-inflated. The Dow Jones Industrial Average, which had risen 200 points during the morning session, plunged 250 by day’s end, and futures continued falling overnight. To add fire to the oil, two leading Republicans admitted Wednesday afternoon that they would not have the majorities required to either remove Obamacare or pass Donald Trump’s proposed budget. Analysts are now wondering whether the president’s sudden about-face on Syria and Russia may be an attempted distraction. Yesterday’s data shows a disappointing drop in services (the worst in 6 months) and non-manufacturing PMIs but a pleasing increase in the ADP’s employment change.

 

 Europe

European stocks rebounded on oil and mining shares yesterday after a slow start, but futures resumed their downhill march during the Asian session, with a huge bearish gap this morning. Immigration concerns are finally rising in Germany, after over a quarter of a million Syrian refugees were granted permission to bring their families. Elections 6 months away, the debate is expected to become quite vocal. Factory orders increased by 3.4% (MoM) – less than expected but better than January’s 6.8% decline. Markit showed an increase in Germany’s composite PMI, but a drop in services, while UK services increased towards a 3-month high, pushing the pound slightly upward. Eurozone data was mostly down. And Greece’s Prime Minister, Alexis Tsipras is calling for a Eurozone summit meeting if creditors delay funds due to Greek incalcitrance over labor, tax and pension reform.

 

Asia

The Asian session overnight saw a 1.5% drop in the Nikkei to a 4-month low, leading the Hang Seng and Australia’s S&P down. Chinese benchmarks were slightly higher, especially the Shanghai Composite after yesterday’s stellar 1.5% increase. With the Caixin services PMI down for March, the IMF is reporting that yuan reserves are far too low for the currency to become a reserve currency – rivalling the US dollar.

Commodities

Oil went south again yesterday after the EIA reported a 1.5 mB build, rather than a drawdown to reflect Tuesday’s API report.

 

 

Week’s Events

11:30 AM GMT EU: ECB Monetary Policy Meeting Minutes
12:30 PM GMT US: Continuing & Initial Jobless Claims
8 PM GMT EU: Draghi Speech
11:50 PM GMT Japan: Foreign Reserves
No Data Trump JinPing meeting

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