Daily Briefing – Thursday, July 6, 2017
European index futures are up this morning, led by the FTSE’s 0.52% increase after Germany’s factory orders were up by 1% MoM for May, half what was expected – primarily on a 2.2% drop in contracts. Regional service and composite PMIs for June yesterday exceeded expectations, as did the zone’s retail sales figure, which shows a 2.6% increase YoY. Britain was the odd man out, services falling 0.4 points to 53.4 – a 4-month low. To add fire to the oil, DeutscheBank yesterday revealed plans to move its investment banking activities from London to its home town of Frankfurt. The city hopes to become the new home for European financial services after the UK exits from the EU.
Weak data continues to pour into the markets from the US, as factory orders for May came in at -0.8% – its worst slide in 8 months. Moreover, retail analytics firms are revealing that consumers slept through the July 4th weekend, with store traffic down 8%, and Moody’s yesterday put the once-industry diamond state of Illinois on review towards downgrading their bonds to junk. Yesterday’s Fed meeting minutes raised hopes for another rate hike this year from 40% to 60% thanks to warnings of over-priced assets. Still, markets shrugged off the warning, the Nasdaq finally gaining some traction ( +0.67%) alongside the S&P, while the Dow lost a fraction of a tenth.
Asian markets closed mixed this morning – down in Japan, Australia and Hong Kong, up in China and New Zealand. Japan’s Interior Ministry yesterday announced that the nation’s population has declined for the 8th year in a row. With the average age rising, social benefits are endangered and reliance on immigration growing. This morning’s trade surplus from Australia shows a better than expected surge to 2.5bn AUD from April’s 90mn AUD.
Amazon yesterday announced special Prime Day sales deals for Alexa users this Monday, resulting in 21 point gains in share value. During its Prime Day sale, Amazon offers a new deal every 5 minutes, targeting sales at $960 million over 3 days. Figures have in the past outdone Black Friday; and last year, share prices shot up from 741.29 to 750.86 within a day!! Also yesterday, Tesla shares fell 7% after Goldman Sachs provided a sell signal on supply chain problems. This morning, as prices approach long-term support at 328, analysts are waiting for a bounce or a break.
Gold settled higher yesterday on Asian geo-political discomfort, but lost some strength over the Fed’s relatively hawkish minutes. This morning finds the metal trying to break through the 1225 barrier as it trends just below. After taking a rest from its latest surge, oil yesterday lost nearly $2 per barrel just before the API announced a huge 5.76 drawdown in inventories. Prices have since recovered some 70 cents of losses. Gulf nations in Cairo today continue to discuss the implications of Qatar’s indifference to sanctions initiated by Saudi Arabia over its support of terror. And finally, the South African Rand yesterday lost 2% after the ruling ANC suggested nationalizing its central bank.
|11:30 AM GMT||EU: ECB policy meeting minutes|
|12:30 PM GMT||US: Trade Balance, Jobless Claims, followed at 1:45 by Markit services & composite PMIs and ISM non-manufacturing PMI at 2|
|3 PM GMT||EIA Crude Oil stocks change|