Daily Analysis – Tuesday, February 28, 2017
The Pound Sterling lost 50 pips against the USD yesterday afternoon, following a Times report that British PM Theresa May is preparing for a renewed Scottish post-Brexit call for independence. British consumer sentiment fell to -6 in February as a Reuters poll projects a 3% inflation in prices by the end of this year (up from 1.8% in January). The result echoes the European Union’s -6.2; though business and industrial confidence in the union are up, and services sentiment soared in February to 13.8. France’s GDP for 2016’s final quarter is expected to rise by 0.4% this morning, with consumer spending up by 0.6% in January (MoM).
Asian markets recovered from their start-of-the-week dumps, reacting to US market confidence ahead of tonight’s expected speech from US President Donald Trump to Congress. The Nikkei was up nearly a full percent, the Shanghai Composite and KOSPI a third, but the Hang Seng lost 0.74%. Japan released auto export numbers overnight, estimating a 335,000 drop from January last year. Industrial output also fell 0.8% for the first time in 6 months and retail increased by a percent for the 3rd month in a row.
Following a 1.8% increase in durable goods and a 2.8% decrease in pending home sales for the month of January, Dallas’ Federal Reserve posted a 2.4 point rise in its manufacturing business index – its 6th monthly increase in a row. This does not reflect, however, declining wages and rising prices. A Moody’s investor report yesterday places the number of distressed retailers at triple its 2009 post-meltdown level. Yesterday’s rally in biotech, financial and energy shares lifted indexes between 0.1 and 0.9%, as investors await the effect of President Trump’s anticipated call for added defense spending in his speech to Congress tonight. Adding to the fervor, Dallas Fed President Robert Kaplan increased expectations for a March interest rate hike. Meanwhile, the USD fell from a high of 101.2 to a low of 100.7 last night before recovering to the 101-region.
WTI Crude was up 0.22% to $54.17 per barrel, as numbers continue to show adherence to the OPEC-led production freeze. Russia, for example, lowered output by 170,000 in February.
|1:30 PM GMT||US: 2016 Q4 GDP, plus Wholesale Inventories for January and Personal Consumption. Later in the afternoon, the Redbook index (1:55), home prices (2:00) and consumer confidence (3:00)|
|9:30 PM GMT||Oil: API Crude oil stocks|
|0:30 AM GMT (+1)||Japan: Nikkei Manufacturing PMI|
|1 AM GMT (+1)||China: Non-manufacturing, NBS & Caixin Manufacturing PMIs|
|2 AM GMT (+1)||US: President Trump addresses Congress|