Daily Briefing – Wednesday, June 14, 2017
Dow and S&P ended at record highs yesterday as tech shares on the Nasdaq rebounded. The Friday FAANG sell-off that weighted down the Nasdaq seems to be over, the final bill coming to $126bn in 2 days of declines. This morning, all 5 stocks were in the green with Apple up 0.8% and Amazon, 1.65%. The Fed convenes today to determine policy, including the cutting of its $4.5 tn asset portfolio, and announce its new interest rates. Yesterday’s data shows a flat inflation reading due to low energy prices. Retail sales grew by a dismal 0.1% – as expected – and consumer inflation was 2% in May.
Markets are opening green this morning, and the GBP is abating its post elections plunge this morning as PM Theresa May sets off for talks with potential Northern Ireland coalition partners. The FTSE closed down by 0.2% yesterday as the pound strengthened, following yesterday’s index data that disappointed on the Producer’s front, but exceeded expectations on the consumer side. With inflation at 2.9%, a 4-year high, pressure will mount upon central banker Mark Carney to rethink policy tomorrow if the number crosses the 3% threshold tomorrow. At present, the hold consensus is being threatened by a vote of 7:1. In Germany, yesterday’s economic sentiment revealed a decline to 18.6 in June. The EU number rose to 37.7, a 2-year high. German consumer inflation readings this morning remain steady at 1.5%.
Mixed markets overnight in Asia, ending higher thanks to the tech shares recovery in the US. The Nikkei up by a tenth of a percent again, the Hang Seng up by 0.15%, but Chinese markers down: -0.74% for the Shanghai Composite and 01.61% for the Chinese FTSE A50. Industrial production there was up 6.5% and retail sales – 10.7%. Fixed asset investments also rose 8.5%, just short of expectations, and housing sales rose 12.6% YoY. Meanwhile, Japanese industrial production missed expectations with a 4% rise for April after a 1.9% contraction in March. With the central ruling on policy on Friday morning, pundits expect interest to remain in negative territory. In Australia, consumer confidence fell nearly 2% to 96.2, its 3rd drop in a row.
Slightly supported by risk aversion, oil nevertheless lost 0.75% following yesterday’s API reading of a 2.75nB inventories build and an announcement by OPEC that its output has increased by 336,000 barrels per day.
Citibank shares tumbled yesterday after its Chief Financial Officer warned that Q2 revenues would be down by 12%. They spike just before the New York closing, recovering half their losses. And following its good news of a merger with Baker Hughes, GE yesterday announced a change of CEOs, dropping shares by 1.8% in late trading.
|8:30 AM GMT||UK: Average earnings, unemployment & claimant count change|
|9 AM GMT||EU: Industrial production and employment change|
|12:30 PM GMT||US Retail sales & CPIs, followed at 6 PM by the FOMC policy statement & interest rate decision.|
|10:45 PM GMT||New Zealand: GDP|
|1:30 AM GMT (+1)||Australia: Consumer inflation expectations & employment.|