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Daily Briefing – Thursday, June 8, 2017

Europe

European markets were stormy yesterday as caution took hold of investors ahead of today’s European Central Bank interest rate decision and the results of UK snap elections. Nearly all indexes closed in the red, the FTSE down 0.62% as the pound moved ½ a percent higher. Ahead of this morning’s decision on interest rates, the European Central Bank is downgrading GDP expectations for the year’s 1st quarter to 1.5% from 1.7. In Germany this morning, Industrial Production rose by 0.8% – more than expected while UK house prices yesterday showed their weakest performance in 9 months.

 

Asia

Asian markets were quiet overnight ahead of UK elections and today’s scheduled ECB meeting. The Nikkei lost a quarter percent, while Chinese benchmarks rose about a tenth. An increase in crude oil imports has pushed China’s trade surplus to a 6-month high of $40.8b – but short of the 46b expectation. Imports rose 14.8% and exports 8.7%. Meanwhile, Australia’s trade balance also dropped from $3.17b to half a billion, and Japan’s figure fell to 553.6 b Yen, while GDP rose 1% – also short of expectations, but still in line with the previous 5 quarters of growth. Although falling commodity prices have hit Australia, increasing demand for natural gas and farm exports bode well for the economy.

 

US

US markets were slightly higher yesterday as financials managed to offset the gravity of energy shares. Yesterday, Congress’ Budget Office indicated an $87b budget deficit in May, 35 billion more than last May’s figure.  Although a June interest rate hike is a near certainty, analysts are downgrading expectations of additional hikes before December, as US data continues to slide. Yesterday’s data indicates consumer credit change crashing from March’s $19.54n to 8.2 in April – its smallest increase in six years. Meanwhile, traders are in wait-&-see mode ahead of former FBI chief Comey’s testimony today, alongside the effects of the ECB meeting and UK elections.

 

Commodities

Oil tanked by $2 a barrel yesterday after the EIA reported a surprising 3.3mB rise in inventories, the first increase in 9 weeks due primarily to a 1.4 million barrel slump in demand for all petroleum products in the US. The report also that OPEC production cuts are falling short of US production increases – a threat to the production freeze only increased by recent unrest amongst Gulf state signatories. And gold moved lower yesterday after 3 days of gains, while bitcoin continues to soar – currently touching the 2800 mark.

 

Today’s Events

9 AM GMT EU: GDP followed by ECB interest rate decision
12:15 PM GMT Canada: Housing starts, followed at 12:30 by housing price index
12:30 PM GMT US: Initial & continuing jobless claims
1:30 AM GMT (+1) China: Consumer & Producer Price Indexes

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