There was mixed news ‘hitting the wires’ regarding the UK economy his morning, firstly we had the news that retail sales had increased by 0.1% in the month of March. This beat expectations of a fall of 0.4% and although only a small improvident month on month the year on year improvement was circa 4.2% up on the previous year.
However, the latest mortgage lending data from the UK missed expectations of a rise to circa 50K for March with the figure coming in at 45.9K which was a fall of close on 2K from the previous months adding to the doubts that the UK property market, despite the price increases over the past year, is not the sure fire bet investment many market commentators would have us believe.
Trading in Asian equities was mainly negative with growing worries over developments in Ukraine depressing several markets and local data providing a help to Japanese stocks. Core consumer prices in Tokyo, a leading indicator of nationwide inflation, rose 2.7 percent in April from a year earlier, the biggest gain in more than two decades, offering the first illustration of how Japan’s sales tax hike is pushing up prices. Nationwide core consumer inflation also matched a five-year high of 1.3 percent in March from a year ago, government data showed on Friday, and is expected to track the Tokyo index’s spike next month.
Mortgage lending in the USA declined to the lowest level in 14 years in the first quarter in the latest sign of how rising interest rates have dented the housing recovery. Lenders originated $235 billion in mortgage loans during the January-March quarter, down 58% from the same period a year ago and down 23% from the fourth quarter of 2013, according to industry newsletter Inside Mortgage Finance.
UK Retail Sales, March 2014
In March 2014, the quantity bought in the retail industry increased by 4.2% compared with March 2013 and by 0.1% compared with February 2014. The quantity bought also increased in Q1 2014 compared with Q1 2013, by 3.8%. This continues a pattern of year-on-year growth since early 2013. Non-food stores saw the highest year-on-year increase (9.6%) since April 2002. This may partly reflect the negative effect of the very cold weather a year earlier, which was the second coldest March on record, in contrast to the warm weather in March 2014. Food stores, however, saw the largest year-on-year decrease (2.3%) since April 2013 (2.9%). In March.
Tokyo Inflation Quickens to Fastest Since 1992
Tokyo’s consumer prices rose 2.7 percent in April from a year earlier, the biggest jump since 1992, pumped up by a sales-tax increase and a year of unprecedented stimulus from the Bank of Japan. Inflation excluding fresh food was less than the 2.8 percent median estimate of 27 economists surveyed by Bloomberg News. Nationally, the same gauge rose 1.3 percent in March, statistics bureau data showed today. Tokyo’s price data provide a first look at the effects of the April 1 tax increase that’s damping consumer demand and is projected to tip the economy into a one-quarter contraction.
Market snapshot at 10:00 am UK time
The ASX 200 closed up 0.24%, the CSI 300 down 1.03%, the Hang Seng was down 1.35% with the Nikkei up moderately at 0.17%. In Europe the main bourses have opened up in negative territory, euro STOXX down 0.71%, CAC down 0.39%, DAX down 0.87% and the UK FTSE down 0.25%.
Looking towards the New York open the DJIA equity index future is down 0.19%, the SPX down 0.18% and the NASDAQ future is down 0.15%. NYMEX WTI oil is up 0.18% at $101.62 per barrel with NYMEX nat gas down 0.02% at $4.70 per therm. COMEX gold is up 0.54% at $1/92.40 per ounce with silver up 0.78% at $64.60 per ounce.
Forex focus
The yen was little changed at 102.34 per dollar early in London from 102.32 yesterday, when it rose 0.2 percent and touched 102.09, the strongest since April 17th. It’s 0.1 percent stronger this week. The yen traded at 141.54 per euro from 141.51 in New York, on track for a 0.1 percent weekly drop. The dollar was steady at $1.3831, 0.1 percent weaker than on April 18th. The yen traded near the strongest level in a week against the dollar as a flareup in tensions between Russia and Ukraine stoked investor demand for safety.
The yen has gained 2.4 percent this year against a basket of nine major currency peers tracked by Bloomberg Correlation-Weighted Indexes amid the escalating crisis in Ukraine. The dollar has declined 0.8 percent while the euro is 0.1 percent weaker in 2014.
Bonds briefing
Thirty-year yields were little changed at 3.45 percent early in London. They have fallen from this year’s high of 3.97 percent in January. Benchmark 10-year notes yielded 2.68 percent. The price of the 2.75 percent security due in February 2024 was 100 19/32.
Treasuries gains were fueled this week by tension in Ukraine, which increased demand for the relative safety of government debt. A rally in 30-year Treasuries has pushed returns past 10 percent in 2014, the best start to a year in at least two and a half decades.
Japan’s 10-year yield was unchanged at 0.62 percent today. Australia’s declined two basis points to 3.94 percent. A basis point is 0.01 percentage point.
