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Daily Briefing – Wednesday, April 19, 2017

Europe

The IMF yesterday reported that the global economy is on its strongest footing in years, pushing its growth estimate for 2017 up by 0.1% to 3.5. The Euro is trading low ahead of today’s CPIs, and oil & mining are putting a lid on trading this morning with most index futures in the red.  UK Prime Minister Theresa May yesterday surprise snap elections for early June to quash resistance to her Brexit negotiations line, pushing the FTSE down a dramatic 2.46%. Most institutional investors are closing their bearish options on the pound after it jumped 25 points on the announcement.

US

Yesterday’s data provided a list of mixed signals: US industrial production came in on expectations, but factory output fell 0.4% – its biggest drop in more than 2 years. And while building permits increased beyond expectations, housing starts fell to their lowest in 4 months.

 

 

Asia

Asian markets followed the US downward, especially the Shanghai Composite, whicvh lost 1%, falling to a 2-month low. China’s Li Keqiang expects to maintain a steady Yuan exchange rate in order to promote foreign orders. Chinese exports are up 8.2% for Q1, imports have increased 24%, but foreign investments fell 48.8% in Q1. Also overnight, Australia’s Westpac Leading Index recovered its March low and then some, rising 0.08%.

 

Commodities

The API yesterday reported a further decline on 840kB in weekly supplies. As oil continues to trend in the $50 range, equity funds raised nearly $20bn in shale production investments during the year’s first quarter, with hopes that the price of shale production is falling and demand from a recovering Chinese economy will increase. Downward pressure, though, is coming from Saudi Arabia’s energy minister this morning, who said that it is too early to decide if a freeze extension is on the agenda. And in spite of geopolitical concerns and a weakening US dollar, Gold fell overnight on a $3bn selloff of futures contracts. Prices soon recovered and are back in the 1287 region.

 

Shares

IBM reported its lowest revenue in 15 years and profits down 13%, but an EPS of $2.38. Shares tumbled 4% on the announcement. Other disappointing results came in from Goldman Sachs, whose shares fell almost 2%, and Netflix, which lost 2.64% on a falling subscriber base. Remy Cointreau, France, on the other hand, showed a 4.2% increase in sales for 2016, Volkswagen profits were up 29% YoY, and Yahoo reported an EPS of $0.18 on $833mn sales – beating expectations and sending Verizon shares up 0.84% ahead of the merger planned between the two. Today’s main report comes from eBay, one of the major online retailers to be enjoying the breakdown in bricks-&-mortar retail throughout the world. The stock, which was down 1.12% yesterday, should react to an EPS of $0.48 – down from 2016’s q4 of 54 cents, and competitors adding new features to their platforms.

Week’s Events

9 AM GMT EU: Trade Balance & Consumer Price Indexes
2:30 PM GMT EIA Crude Oil Inventories
10:45 PM GMT New Zealand CPI
11:50 PM GMT Japan: Merchandise Trade Balance & Foreign Investments
Post NY Closing eBay Quarterly Earnings Report.

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