MORNING ROLL CALL
Positive USA jobs data fails to raise equity markets, as a rout in oil causes investor jitters
Wednesday morning began with (yet another) curious set of data releases from an economic superpower, this time it was China’s turn to raise analysts’ eyebrows. Exports slumped to a negative reading for February; coming in at -1.3%, missing the expectation for 14% growth. Trade Balance was an even bigger shock; printing at -$9.15b for the month, missing the forecast of $27.0b. Then we had China’s import data, although flagging up as a positive miss; coming in at 44.7% up in February, on a year on year basis.
Analysts overall rated the Chinese data as bullish, judging that the huge rise in imports will lead to a stimulus for the China domestic economy. The narrative developing in the mainstream media on Wednesday seemed to suggest that one of China’s economic aims; to stimulate consumer spending, was coming on stream and according to plan. The alternative view is that this data set could be a canary in China’s economic coal mine; chirping warnings that many of us need to wake up and pay attention to. If China’s exports are crashing, where is the global demand to support, for example, the OECD’s estimates for global GDP growth in 2017?
In Europe Germany’s industrial production rose to 2.8% for the month of January, ahead of the 2.4% forecast. Whilst the Swiss yearly CPI inflation figure came in at 0.6%. In the UK the Spring Budget caused little in the way of ripple effects, although sterling made marginal recoveries in the New York afternoon session versus its major currency peers.
In the USA mortgage applications fell to 3.8% growth in the first week of March, from 5.8% previously. The ADP jobs data was extremely positive; coming in at 298k for the month of February, ahead of expectations of 185k. Generally regarded as the heralding data for NFP, this ADP data could suggest an extremely bullish NFP release this coming Friday. Wholesale inventories for January fell by -0.2% and wholesale trade sales fell by -0.1%, both releases missing forecasts. Crude oil inventories for the USA came in at 8209, ahead of predictions of 2000, causing a circa 5.5% slump in the price of WTI oil.
The DJIA closed down 0.33%, SPX down 0.23% and the NASDAQ up 0.06%. European equity markets experienced mixed results; STOXX 50 up 0.13%, DAX up 0.01%, CAC up 0.11% and the UK’s FTSE down 0.06%.
The Dollar Spot Index strengthened by 0.3%, maintaining the previous two day advances after the bullish February jobs data delivered from ADP Research Institute. GBP/USD slipped by circa 0.3% to $1.2169 on the day, falling for the third day in series, EUR/USD fell by circa 0.2%, to $1.0539 on the day.
WTI (West Texas Intermediate) crude slumped by approx. 5.5% to $50.02 a barrel, the lowest level seen since Dec. 7th., after USA official government data revealed that the production cuts from OPEC and other producers, have not had the desired effect of shrinking U.S. supplies.
Silver slumped to $17.24 per ounce, a significant reversion since the $18 handle breached on February 26th. Gold slipped by circa 0.6 to $1,207 an ounce, closing in on the lowest level witnessed since early February.
Economic calendar events for March 9th, all times quoted are London (GMT) time.
08:30, currency impacted ECB. President Draghi Holds Press Conference in Frankfurt. This conference is the precursor to the various interest rate decisions which will be revealed by the ECB in a series from 12:45 onwards. The rate of the current asset purchase (QE) programme will also be revealed. Investors may be hanging on to Draghi’s every word, in anticipation of clues with regard to interest rate decisions.
12:45, currency impacted EUR. European Central Bank Rate Decisions (MAR 09). The expectation is for the main rate to be kept static at 0.00%, the Marginal Rate to stay at 0.25% and the deposit rate to stay at -0.4%. Any change on this policy would immediately and naturally impact on the value of the euro versus its peers.
13:30, currency impacted USD. Initial Jobless Claims (MAR 04). Jobs claims in the USA for the week of March 4th are predicted to show a modest increase to 237k, from 223k in the previous week.
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