MORNING ROLL CALL
European equities rise due to favourable data, euro falls, USA equities rise, dollar rises, WTI oil maintains recent winning streak, gold loses
USA equities ended the day just short of record high closes, as the momentum which developed from the Trump Middle East business tour, continued throughout Tuesday. The DJIA ended up 0.21% and the SPX closed up 0.18%. In terms of USA specific economic calendar data, new home sales data missed the economists’ polled consensus forecast by some distance; coming in at -11.4% YoY, versus expectations of a -1.8% fall. Various PMIs relating to the USA economy, were more favourable; Markit services PMI came in at 54, composite PMI at 53.9, and manufacturing PMI at 52.5. However, the Richmond Fed index reading coming in at 1, versus expectations of 15 and significantly below the reading of 20 for March, was a huge shock. The new home construction market (arguably) being in recession, added to the occasional soft data reading missing expectations (such as the Richmond Fed index), suggests that the USA economy is drastically in need of the huge infrastructure stimulus, promised by Trump during his election campaign, irrespective of the $360b orders he collected from the KSA.
European data published on Tuesday was mostly favourable; German GDP came in at 2.9% annually, although exports at 1.3% for Q1 disappointed by missing the forecast, as did imports. However, the various IFO business/expectations/assessment readings, surpassed forecasts. The various Eurozone PMIs were mostly favourable; composite and manufacturing beat forecasts, with services just coming up short at 56.2. STOXX 50 closed up 0.52%, DAX up 0.31%, CAC up 0.47%.
In the UK, various govt borrowing figures were published on Tuesday and revealed a deterioration in the public finances; public sector net borrowing and other data worsened across the majority of the readings in the month of April. The UK’s FTSE and sterling fell as a consequence, whilst investor mood in London was also effected by the Manchester terrorist incident. The FTSE closed down 0.15%.
Looking at our major currency pairs; USD/JPY ended the day at close to 111.80, up circa 0.5%, GPB/USD closed out at 1.2963, down circa 0.3% having at one point during in the London session spiked back through the 1.30 handle. EUR/USD slipped by approx. 0.5%, to end the day at circa 1.1185. USD/CHF ended the day at 0.9752, up approx 0.5%. In general terms the U.S. Dollar enjoyed gains versus the majority of its peers, whilst the two major European currencies; sterling and the euro, fell versus their respective peers, as did yen. Both sterling, Swissie, the Loonie, Aussie, kiwi and the euro made small gains (circa 0.2%) versus yen. WTI oil rose for the fifth consecutive day in series, ending the day at approx. $51.07 per barrel, whilst gold slipped by circa 0.8% on the day, to close out at $1251 per ounce.
Economic calendar events for May 24th, all times quoted are London GMT time.
06:00, currency impacted EUR. German GfK Consumer Confidence Survey (JUN). The reading is expected to remain unchanged, at 10.2.
12:45, currency impacted EUR. ECB President Draghi speaks in Madrid. Draghi’s comments, coming after Angela Merkel suggested that the euro is too cheap, may give clues as to ECB future guidance.
14:00, currency impacted CAD. Bank of Canada Rate Decision (24 MAY). There is little expectation, according to the economists polled, for a rise above the current rate of 0.50%.
14:00, currency impacted USD. Existing Home Sales (MoM) (APR). House sales are predicted to fall to -1.1% growth, from the 4.4% reading registered in March.
14:30, currency impacted USD DOE U.S. Crude Oil Inventories (19 MAY). Given the recent rise in the price of oil, analysts will monitor the latest inventory data carefully, last week’s reading came in at -1753k.
18:00, currency impacted USD. FOMC Meeting Minutes (3 MAY). These meetings will be carefully scrutinised, based on the Fed’s previous implied commitment to rise rates several times during 2017.
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