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Daily Briefing – Wednesday, July 26, 2017

Europe

European markets closed yesterday in the green after Germany’s business sector ignored PMIs and handed in a better than expected expectations index. The DAX and EStx both were up about a half percent and the FTSE +0.77% on commodity stocks and rising factory production. Industrial orders came in at a less than expected 10 – down from June’s 16.

 

US

The US Senate yesterday defied the president on 2 fronts: it failed to repeal Obamacare and it approved new sanctions against Russia. The US dollar remained unimpressed, adding 0.15%. At a worse than expected +5.7%, yesterday’s Case Shiller house price index nevertheless puts prices at a record high of 190.61. Indexes rose to record highs again, the S&P by nearly 1/3% and the Dow nearly a half as the FOMC prepares to meet tonight. Although interest is unlikely to change, the Fed’s tone is expected to turn dovish in light of weak inflation and other economic data.

 

Asia

The Chinese government has announced that it will complete converting its major state companies into joint-stock firms by the end of this year. Meanwhile, blue-chip stocks dropped for the 2nd day in a row on fears of regulatory tightening. Chinese indexes closed down this morning led by the Shenzhen Composite at 0.9%, while other Asian benchmarks were up led by Australia’s S&P (+0.88%) which rose on a surge in oil prices. Aussie inflation was weaker than expected after a month of low fuel prices. In his speech, RBA governor Lowe said interest will remain low due to rising household debt and weak wage growth. Drugs and construction helped push up the Nikkei half a percent, ending a 3-day losing streak, after BoJ Deputy Governor said that productivity is improving and he sees no reason to ease policy – pushing down the Yen. New Zealand’s trade surplus tripled.

 

Shares

Daimler shares rose slightly this morning after the company reported a $2.8bn increase in profits. PayPal reports later today after seeing a 0.55% drop in share prices on a fee increase. EPS is expected to rise from last year’s $0.36 to 0.44. Tomorrow, Amazon is expected to show positive data with $1.41 earnings per share (down from $1.78 YoY) on a 20% increase on revenues to $27.3bn. Shares are up 38% since year’s start. Other companies reporting today include Bayer, Coca Cola, Facebook, Lloyds of London and Siemens.

 

Commodities

Oil traders are celebrating last night’s 10.2 million barrel inventory drop. WTI this morning is at 48.39 and rising. Brent – ditto at 50.6. And more news from the crypto-currency world: TenX is a new Singapore startup that has developed a debit card that dips into the Bitcoin, Ethereum and other digital currency systems. Similar companies, CryptoPay and Xapo only enable Bitcoin payments.

 

Today’s Events

8:30 PM GMT UK: GDP and services index
6 PM GMT US: Fed Monetary Policy statement & interest rates, following mortgage applications at 11 AM and New Home Sales at 2 PM
11:50 PM GMT Japan: foreign investments.

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