Daily Briefing – Wednesday, May 5, 2017
Not surprisingly and following several other European airlines, Italy’s national carrier Alitalia yesterday filed for bankruptcy after employees refused to cooperate in a rescue plan. Elsewhere in Europe, the FTSE led indexes south after Sainsbury and mining equities fell 2-3% as trading began. Germany’s unemployment remained level at 5.8% with jobless claims dropping by a better-than-expected 15K; and the UK construction PMI shot up to 53.1. The zone’s PPI dropped by ½% and 1st quarter GDP was revised upward by 0.1% to 0.5% (QoQ).
Adding to the fire just south of its border, China has issued a travel warning for North Korea, its embassy there instructing all nationals to return to China. Shares across the region had a mixed session, easing earlier gains on positive global earnings and manufacturing data. Hong Kong and S. Korean markets were closed yesterday for Budha’s birthday, and Japan is shut down until Friday. Australia’s services sector index in April shot up to 53 from the previous month’s 51.7, and unemployment in New Zealand fell from 5.2 to 4.9%.
As NFP Friday draws closer, the US Federal Reserve will meet today to issue a statement and interest rate decision. Expectations are that there will be little change, as data continues to disappoint, the dollar index remains weak, and inflation remains in the 1.6% region. Auto sales for April were down for the 2nd month in a row, but business investment is slightly up. This morning’s USD is – however – enjoying backwind from June’s expected rate hike.
Bloomberg yesterday reported that the biggest winners from OPEC’s production freeze agreement have been Iran and Iraq. Saudi Arabia is in a scramble to pressure prices up ahead of its ARAMCO IPO next year. Prices plunged after the Saudi oil minister interview towards the $47 mark and were trending in the 47.90 region yesterday. Still, prices rose this morning on the API’s 4mB drawdown and are currently testing 48.20.
Apple’s report yesterday showed missed revenue targets and iPhone sales, causing shares to fall in after-hour trading. The company’s soft spot is China, where local cheaper brands are gaining market control. To ease the pain, Apple’s board is increasing its share repurchase program. Twitter, on the other hand, soared after the weekend thanks to excellent performance and positive comments from the billionaire Mark Cuban. In Germany, Allianz shares fell after Q1 earnings dropped. Tesla will report this afternoon after Tuesday’s record $327 price tag echoes expectations of its mass targeting M3 launch.
|12:30 PM GMT||US: ADP Employment Change, followed at 1:45 by services, manufacturing & composite PMIs and the Fed’s policy statement at 6.|
|2:30 PM GMT||EIA Crude Oil Inventories change|
|1 AM GMT (+1)||Australia: New Home sales followed at 1:30 by imports, exports & trade balance.|
|1:45 AM GMT (+1)||China: Caixin Services PMI|