Daily Briefing – Thursday, July 13, 2017
On top of yesterday’s surprise release of Trump Jr.’s emails on Russia, US markets were yesterday dumbfounded by a 7.4% plunge in mortgage applications and Fed Chair Yellen’s testimony to Congress. The nation’s central banker warned the house that the country’s debt trajectory was unsustainable and threatened living standards, increasing chances for a fiscal crisis that would harm mutual, trust and pension funds, insurance and banks. Still, her words were construed by markets as “dovish” and indexes rose – the Nasdaq by 1.1%! Meanwhile, Canada raised its interest rates by a quarter as Deutsche Bank issued a warning regarding the country’s household debt to income ratio, which has soared to 150%, just as the US’s is down to just under 100. Inflating a construction bubble, 7% or Canadian workers are now employed in the construction sector – double that in the US. South of the border, former Brazilian President Lula da Silva’s sentencing to 9 years on corruption charges has pushed up the real significantly.
European equities shot up yesterday by their 2nd largest rise in 10 months after Yellen’s dovish comments – the Eurostoxx by 6 points! The CAC40 is up 0.1% this morning on a tripling of sales in the Middle East (2.3% up in Iran) and Africa; and the FTSE displayed its best performance in 3 months (1.2%) on Burberry’s 3.43%, energy and real estate. Nevertheless, last night saw a slowing down in housing prices to 7% from May’s 17% increase as Brexit uncertainties take hold. On the other hand, UK unemployment has hit a 42-year low – 4.5% despite a 0.5% drop in real wages, as earnings rose 2% in May. Yesterday also saw an excellent reading for Eurozone industrial production – up 4% in May compared to 1.2% in April. This morning’s CPIs were all in line with expectations and flat on May readings.
Asian equities were all up this morning except the Nikkei, which fell on a strengthening Yen on mini-Trump jitters and underperforming bank (Mitsubishi down 1.5%) and auto shares (Toyota down 0.2% and Honda down 0.4%). Overnight, China’s trade surplus grew by $2bn to 42.77 in June, with exports up 11.3% – a 4th straight month of positive results – and direct foreign investments up 2.3%. In Australia, July’s expected consumer inflation read at 4.4%, an increase on June’s 3.6%.
Amazon yesterday published an announcement that Prime Day 2017 was the “biggest global shopping event in its history”, leaving Black Friday and Cyber Monday sales in its wake. Sales were up 60% from last year’s event and tens of millions of sales were registered. Anyone who purchased shares on Thursday at 961 saw their value rise to 1005 when markets closed yesterday – a 4.4% profit, compared to the Nasdaq benchmark’s rise of 2.8% over the same period. Ahead of next week’s launching of quarterly earnings season, Novartis (reports Tuesday) is up 1.49% after its new leukemia drug received FDA approval; Netflix (reports Monday) is up 2.86% ass global subscriptions take hold; PayPal (reports Wednesday) is up 3.27 as its partnership with Apple is announced; and NVidia (which will report as the cycle closes in early August) is up a staggering 4.25% as the company becomes a leading player in the cryptocurrency mining sector.
As gold extends its (albeit gradual) winning gain into its 4th day, oil futures are down 0.18% this morning in spite of yesterday’s EIA crude stocks change of minus 7.56 million barrels. At the root of the problem lies Nigeria’s refusal yesterday to cap its daily 1.7mB oil production quota.
|12:30 PM GMT||US: PPIs, Jobless claims and Janet Yellen’s continued testimony before Congress at 2 PM.|
|10:30 PM GMT||New Zealand: Business PMI|
|4:30 AM GMT (+1)||Japan: Industrial Production|