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Daily Briefing – Thursday, September 7, 2017

US

US markets were shocked upon closing with the announcement that Fed VC Stanley Fischer was retiring nearly a year ahead of time due to “personal reasons”. That plus news that market-friendly Gary Cohn would probably NOT replace Janet Yellen following a day of dismal data (a growing trade deficit, a point drop for services and non-manufacturing PMIs, Trump’s surrender to Democrats on raising the debt-ceiling, a mediocre beige book that casts doubt on auto sales, and growing tensions in SEAsia) created an 8-point bear gap in the S&P, which is still trading 8 points below yesterday’s high of 2469. Another shock came from across the border when the Bank of Canada announced a 25 basis point increase in interest rates to 1%, sending the CAD soaring. Governor Poloz mentioned a strong economy but concerns over “elevated household indebtedness”.

 

Europe

Data from Europe this morning is characterized by a 4% increase in German industrial production – better than July’s 2.7 but still beneath expectations – and a better than expected performance for France’s trade deficit, which came in at EUR 6bn. Equities are moderately up after the FTSE suffered yesterday on insurance shares, and the GBP continues to rise moderately as August house prices show their fastest jump this year – 2.6%YoY.

 

Asia

After adding some more combustion to the geopolitical tensions in the area, South Korean equities recovered in overnight trading. Contrary to rosy expectations, Australian retail sales came in flat overnight, indicating perhaps a less optimistic public than yesterday’s GDP increase would call for. China’s resiliency was a contributor to a halving of the down-under nation’s trade surplus, which came in at $460m for July. At source – stagnating wage growth, the KOSPI adding 1.14% followed by the Nikkei’s 0.23% increase. Chinese equities fell – the Shanghai composite by nearly 2/3% and the Hang Seng – a third.

 

Commodities

Yesterday’s API report shows an increase of 2.8mB in supplies but a drop in gasoline stocks. WTI broke through the 49 resistance level above which it now safely perches – a 4-week high.

 

Today’s Events

11:45 AM GMT EU Interest rates
12:30 PM GMT US Jobless Claims
2 AM GMT (+1) China Trade Balance

 

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