Daily News

Daily Briefing – Wednesday, May 31, 2017

Europe

The Pound Sterling is down ½ a percent this morning after polls showed that Theresa May’s majority in Parliament is slipping ahead of the upcoming snap elections. Last night’s Gfk consumer confidence reading is still in negative territory but shows a much better than expected climb to -5 – a 4 month high; and JP Morgan yesterday upgraded forecasts for British equities, as the FTSE shows a 6% increase on the year. In Germany, retail sales for April fell unexpectedly by nearly a percent and CPIs disappointed expectations. DeutscheBank downgraded other European banks to below-benchmark, based on a weakening momentum in Eurozone growth indicators. The report also upgraded the energy sector to above-benchmark and comes the same day as the US Federal Reserve fined the German bank $41 million for anti-money laundering deficiencies between 2011 and 2015. Meanwhile, European stock indexes are down for the 4th day in a row thanks to Greece and Italy where, ironically, shares are up; and the zone’s sentiment markers were uniformly down.

 

Asia

Following China’s latest cash injection into financial markets, concern is growing over Hong Kong’s inflating housing market. Prices are up 23% in 12 months. This morning’s manufacturing PMI in China shows a better-than-expected 51.2 – the same as in April – while Japan’s industrial production for April was up 4% MoM, over expectations of 4.3 but well above March’s 2% contraction and its best performance in 6 years. The Japanese Yen yesterday gained momentum on strong retail sales while the Nikkei closed flat and other European indexes edged slightly lower. This morning sees the Hang Seng and Shanghai Composite up a fraction and the Nikkei down 0.2%. And in Australia, private sector credit increased 0.4% MoM.

US

Consumer confidence based on the Conference Board slipped in May, although yesterday’s personal expenditure numbers remained flat but down Year over Year, and the Case Shiller house index showed a 3-year record high in prices – 5.9% YoY in May. Federal Reserve Governor Lael Brainard yesterday told the New York Business Economics Association that chances for a June interest rate hike were still high but are threatened by soft inflation numbers. She also reiterated the requirement that the Fed reduce its assets holdings by $4.5tn.

Commodities

Dubai this week announced the launch of a gold-backed currency – the OneGram, which is usable for digital payments – this after the Auditing Organization for Islamic Financial Institutions in December launched its Shariah gold standard. Oil was on its way down again this morning as US demand seems to be failing to live up to summer driving requirements that would otherwise drain surplus inventories. The EIA estimates that US production is currently averaging 9.3 mB per day.

Shares

Amazon shares topped $1000 in yesterday’s trading after its first bricks & mortar shop opened in New York.

Week’s Events

7:55 AM GMT

Germany: Unemployment

8:30 AM GMT

UK: Consumer Credit & Mortgage Approvals

9 AM GMT

EU: Unemployment & CPIs

12:30 PM GMT

Canada: GDP

2 PM GMT

US: Pending Home Sales followed at 6 by the Fed’s Beige Book

8:30 PM GMT

API Crude Oil Inventories

0:30 AM GMT (+1)

Japan: Nikkei Manufacturing PMI

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