Today's Main Events
- 9:00 UK Trade Balance
- 13:30 US Trade Balance & Jobless
- See Live Macro Calendar for all data, incl. consensus expectations
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UK 100 Leaders | Close | Chg | % Chg | % YTD |
Standard Chartered PLC | 1315.5 | 87 | 7.1 | -6.64 |
Rio Tinto PLC | 3220 | 89.5 | 2.9 | 3.04 |
Croda International PLC | 2451 | 62 | 2.6 | 35.86 |
Fresnillo PLC | 1565 | 35 | 2.3 | 2.49 |
Xstrata PLC | 912.5 | 15.6 | 1.7 | -6.7 |
Randgold Resources Ltd | 6190 | 105 | 1.7 | -6 |
Prudential PLC | 804.5 | 12 | 1.5 | 26 |
Aviva PLC | 318.2 | 4.2 | 1.3 | 5.78 |
UK 100 Laggards | Close | Chg | % Chg | % YTD |
Smiths Group PLC | 1075 | -38 | -3.4 | 17.49 |
Pennon Group PLC | 730 | -23.5 | -3.1 | 2.24 |
ICAP PLC | 327.8 | -8.4 | -2.5 | -5.51 |
InterContinental Hotels Group PLC | 1683 | -42 | -2.4 | 45.46 |
AstraZeneca PLC | 3015 | -68 | -2.2 | 1.34 |
Serco Group PLC | 579 | -13 | -2.2 | 22.15 |
International Consolidated Airlines Group SA | 153.3 | -3.3 | -2.1 | 4 |
Vedanta Resources PLC | 986 | -21 | -2.1 | -2.86 |
Major World Indices | Mid/Close | Chg | % Chg | % YTD |
UK 100 | 5845.92 | 4.68 | 0.08 | 4.91 |
11436.4 | -24.54 | -0.21 | 13.2 | |
CAC 40 | 3438.26 | -15.02 | -0.43 | 8.81 |
DAX (Xetra) | 6966.15 | -1.8 | -0.03 | 18.1 |
Dow Jones Industrial Average | 13175.6 | 7 | 0.05 | 7.84 |
Nasdaq Comp. | 3011.25 | -4.61 | -0.15 | 15.59 |
S&P 500 | 1402.22 | 0.87 | 0.06 | 11.5 |
Nikkei 225 | 8978.6 | 97.44 | 1.1 | 6.19 |
Hang Seng | 20266.79 | 201.27 | 1 | 9.94 |
S&P/ASX 200 | 4308.3 | -4.26 | -0.1 | 6.20 |
Commodities & FX | Mid/Close | Chg | % Chg | % YTD |
Crude Oil Light Sweet Composite | 93.595 | 0.325 | 0.35 | -5.46 |
Gold Composite | 1618.75 | 3.65 | 0.23 | 3.34 |
Silver Composite | 28.12 | 0.125 | 0.45 | 1.24 |
Palladium Composite | 589.875 | 3.375 | 0.58 | -10.19 |
Platinum Composite | 1418.5 | 9.1 | 0.65 | 1.24 |
GBP/USD – US $ per £ | 1.5677 | – | 0.07 | 0.94 |
EUR/USD – US$ per Euro | 1.2381 | – | 0.08 | -4.42 |
GBP/EUR – Euros per £ | 1.2661 | – | -0.01 | 5.53 |
UK 100 called to open +30pts, maintaining solid run of late thanks to Chinese macro data overnight providing with another case of bad news is good news. We’ve long spoken of investor concern that the emerging nation makes a hard landing in terms of economic growth (affected by US and Eurozone recovery issues after downturn from financial crisis).
This has intensified recently with industrial, manufacturing and inflation figures suggesting its that landing gear might be stuck in the fuselage. With this, expectations have risen that the Peoples Bank of China (PBOC) will continue to help out by tinkering with monetary policy to encourage a growth revival (interest rate cut, deposit rate cut) to get China itself moving even while the rest of the world is struggling. This is expected to provide a boost to risk assets such as equities and commodities.
Data overnight goes to reinforce the believe that China will need to announce more/new measures to provide the coordinated stimulus the world is pining for and is not yet forthcoming from the European Central Bank (ECB) and US Federal Reserve (Fed) and Bank of England (BoE)
In terms of Chinese data, Producer Price Inflation (PPI: what manufacturers can sell for) showed an acceleration in contraction (the rest of the world is not buying enough from them – they’re having to cut prices). Industrial production showed an understandable cooling. Consumer Price inflation (CPI) was in fact slightly higher than expected, but still showed a sharp decline to a 30-month low from the prior month (they’re not buying enough themselves, because we’re not buying enough from them; simple.).
To reinforce the point on CPI, Retail Sales data missed expectations. Growth is still strong, but waning. In an economy where we’ve become accustomed to GDP growth circa 8%, if CPI and Retail sales keep falling (if they don’t earn, they can’t spend) we’ll struggle to maintain such growth and won’t be able to look to the nation to help pull us all back from the economic precipice.
Other data overnight maintained the ‘good news is good news, bad news is good news’ trend, with Japanese machine orders showing a much bigger than expected slowing (Bank of Japan – BoJ – to announce stimulus?). Australian employment data was better than expected. Good data from Australia could suggest more demand for Chinese goods, helping out the nation, but Japanese consumer confidence dipped more than forecast.
Following on from yesterday, hopes still abound that after the Bank of England’s (BoE) updated but still grim outlook (slashed UK growth expectations yet again) that more stimulus (see a trend here?) could be on the cards either via more Quantitative easing (money printing to bring down borrowing costs), an interest rate cut or something else.
Markets still awaiting more details from ECB President Draghi on the ‘conditions’ he’d impose on Italy and Spain if he were to intervene in the sovereign bond markets to bring down their borrowing costs and help them avoid bailouts. He’s waiting for them to ask for help. Stalemate!
In commodities, Gold made a little headway towards recent highs of $1,618, helped by USD weakening on stimulus hopes (if Fed prints more money, to ease credit and encourage growth, it devalues the currency making it easier for us to buy more dollars and thus more commodities) Brent Crude Oil still moving on North Sea supply concerns – now around $113 barrel In FX, GBP stronger vs USD. EUR flat vs USD. GBP flat vs EUR.
Today’s focus likely on the UK’s trade balance which is expected to show a widening of last months’ deficits (a stronger GBP thanks to Europe’s woes and a deferral of a rate cut is pressuring exporters). The OECD publishes an update of its Lead indicators. There is no consensus, but last month saw a decline of -0.47%. Thereafter, the US trade balance should show a slight narrowing of the deficit, while Jobless data for the nation is likely to have tread water on last week. Although watch out for the habitual upward revisions of the prior week’s data. This can create the illusion of improvement.
Corporates results out this morning from Aviva, AMEC, Swiss Re, Commerzbank, Nestle, Tui Travel and Randgold Resources. At first glance it looks like a beat for the german investment bank the Swiss food manufacturer and the gold producer. Insurer Aviva looks to have missed. For more information on results, call in to speak to your friendly trader.
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Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research