Our analysts have their fingers on the pulse of the world's financial market news.
Quite a surprise in terms of Japanese GDP this morning. Real gross domestic product (GDP) for the January-March period expanded an annualized 1.7 percent against expectations in a Reuters poll for a 0.2 percent rise. On a quarterly basis, GDP grew 0.4 percent against a poll forecast of a 0.1 percent quarterly gain. While some could attribute at least part of this to the leap year effect and downward revision to previous quarterly growth, domestic demand contribution to GDP also inched up 0.2 percentage points thanks to higher spending. Business investment remains a key bug bear and it’s expected that the government will hold a fairly flexible policy stance amid developments in China and global market volatility.
Widely expected to announce new fiscal stimulus during the G7 Summit this month as part of his "Abenomics 2.0" program, we still await news on whether this sales tax will be delayed.
The USDJPY hovers near the 109 level now as the renewed appetite for the greenback pushes the dollar to a 2 week high amid increased speculation that a June rate hike may still be on the table. Despite all the loose monetary policies, it would not be surprising to see the Yen garner additional strength should equity markets sell off.
All eyes on the FOMC minutes this evening. Sure, the probability for a hike in June has increased threefold but it remains at a paltry 12%. Much of this increased hawkishness is derived from some non voting FOMC memebrs stating that the June meeting was live.
Today's Fed minutes may help in giving further clues as to its future intentions but given the EU referendum is set to take place on 23rd June it might be foolhardy of the FOMC to hike rates without the full story - it may well backfire should the Brexit side carry. One would imagine that such an event would be dollar positive as a result of risk off flows and this might not be all that beneficial for the US given that most of the western world is either cutting rates or on the cusp of doing so.
Goldman Sachs, fresh from calling a bottom in the oil price has now issued an equity neutral note for the next 12 months - they remain overweight cash.
Given that Eurozone CPI was expected show a 0.2% drop year on year and came in as expected, we may well be set for even deeper negative rates from the ECB - it all depends whether Mario Draghi himself oil prices have in fact bottomed and may lead to an increase in inflation owing to potential base effects over the second half of the year.
With the dollar also firmly in the driving seat and diverging monetary paths still very much front and centre, the EURUSD has slipped below the 1.13 mark.
Oil inventories later this afternoon may shed more light on this but given that we're near the key physiological resistance level of $50/bbl, there is more room for a supply glut surprise than a sudden uplift in global demand. Should Canada begin to pump more earlier than expected then this recent surge may turn out to be a mere blip.
UK labour data was good with the employment rate hitting a record high. A decent rise in average earnings and the fact that the unemployment rate remained at 5.1% is good news. The claimant count fell in April, to 738,000 but the prior month was upwardly revised to 14,700 – the largest gain mom since September 2011. Many will attempt to correlate this with the Brexit narrative but the early Easter holiday may well have impacted here.
The FTSE is down 0.3% with miners providing the main drag as copper prices hit a three month low and profit taking set in.
The undertain demand from China will likely continue to be a theme for the foreseeable fututre. Antofagasta has also stated that it expects coppoer prices to remain muted for the next 2 years.
European markets look set to turn lower at the start of trading on Monday. The new US and Chinese tariffs take effect today so traders in Asia and Europe look cautious. Both continents are more exposed to global trade than the US. For markets, the new tariffs …Read more
Whilst risk sentiment has been healthy across the week, this swelling optimism boosted US stock markets to an all-time high overnight. A rally in tech stocks, which have done a lot of lifting for the indices over the year, in addition to fading concerns over U…Read more
Despite a shaky end to trading on Wall Street overnight, which saw the Dow gain 0.6%, the S&P just 0.1% and the Nasdaq slip by the same, Asian markets moved broadly higher on improved sentiment. European bourses are taking the lead from the US over Asia, w…Read more
Asian markets took the lead from Wall Street overnight, rallying as the latest tit for tat measures in the escalating trade spat have not been quite as severe as the markets had been expecting. Tech stocks were also heavily in demand, bouncing back after steep…Read more
Traders are faced with a sea of red in risk-off trading as markets are set to open on Tuesday. Despite the fact the market has been expecting an escalation in trade tensions between the world’s two largest economies with further tariffs from Trump; the reality…Read more
Escalating trade tensions will once again be a central theme to driving sentiment and trading this week, with President Trump widely expected to levy tariffs on a further $200 billion worth of Chinese imports, potentially as soon as today. The elevated trade c…Read more
European bourses are set to take the lead from a positive session on Wall Street and Asia overnight. A drive higher from tech stocks on Wall Street helped lift Asian equities after their recent battering, pulling them off 2-year lows.
Asian markets were endin…Read more
Today will be a busy day for traders with 2 central bank rate decisions and US inflation data all due for release within a few hours of each other. The BoE monetary policy announcement will kick things off, followed shortly after by the ECB rate announcement a…Read more