From the UK this morning we received a surprise in the form of house price falls with the Halifax reporting that house prices in the UK have fallen by 1.1% in March, this is only the third decline over the past 15 months. Analysts will now be carefully watching to see if this reading is an outlier or indication that a trend is developing suggesting that UK consumers can’t pay anymore in what has been a runaway market particularly in the S.E. of the UK.
German factory orders increased by 0.6% in March but in an overall optimist print there was detail in the print that could be of concern; the new orders from the euro area were up 5.9% on the previous month, while new orders from other countries were down 3.1%.
From Europe we received detail regarding the retail sales performance of Eurozone countries. The Markit Eurozone Retail PMI – which tracks month-on-month changes in the value of retail sales – registered at 49.2 in March, up from February’s mark.
Asian markets were in a mixed state ahead of the NFP US jobs report due to be released later on Friday, which influences the Federal Reserve’s thinking on monetary policy. A retreat from risk was apparent among some Asia tech stocks, however, which followed their US counterparts lower. Wall Street paused for breath on Thursday after two successive record closing highs for the S&P 500.
UK Halifax House Price Index – March
House prices fell by -1.1% in March. This was only the third monthly decline in the past fifteen months; this is in contrast to the previous fifteen months when there were eight monthly price falls. The monthly movements, however, can be volatile and the three month-on-three month change is a more reliable indicator of the underlying trend. However, house prices in the latest three months (January 2014-March 2014) were 2.3% higher than in the final quarter of 2013. This is within the range of 1.8% – 2.3% recorded for this measure since June 2013. Prices in the three months to March were 8.7% higher than in the same three months a year earlier.
German factory orders in February 2014 up a seasonally adjusted 0.6%
Price-adjusted new orders in manufacturing in February 2014 rose a seasonally and working day adjusted 0.6% on January 2014 (following +0.1% in January 2014 on December 2013), according to provisional data of the Federal Statistical Office (Destatis). Domestic orders increased 1.2%, foreign orders increased 0.2%. As regards the direction of trade in foreign transactions, new orders from the euro area were up 5.9% on the previous month, while new orders from other countries were down 3.1%. The manufacturers of intermediate- and capital goods recorded increases in orders of 1.2% and 0.4%.
Eurozone retail sales fall marginally in March
March retail PMI® data from Markit showed a second straight monthly fall in sales across the Eurozone retail sector. That said, the rate of decline was slower than in February and only marginal. Country level PMIs converged towards the 50.0 mark that separates expansion from contraction, with growth easing to a marginal pace in Germany and Italy recording its slowest decrease in sales for more than three years. Sales in France were unchanged from February, ending a six-month run of decline. The Markit Eurozone Retail PMI – which tracks month-on-month changes in the value of retail sales – registered at 49.2 in March, up from February’s mark.
Market snapshot at 10:00 am UK time
The ASX 200 closed up 0.24%, the CSI 300 up 0.95%, the Hang Seng down 0.46% and the Nikkei down 0.05%. Euro STOXX is up 0.18%, CAC up 0.24%, DAX up 0.25% and the UK FTSE up 0.43%.
Looking towards New York’s open the DJIA equity index future is up 0.10%, the SPX is up 0.12% and the NASDAQ up 0.15%. NYMEX WTI oil is up 0.31% at $100.60 per barrel with NYMEX nat gas down 0.72% at $4.44 per therm.
Forex focus
The dollar was little changed at 103.83 yen early in London from yesterday, when it touched 104.11, the highest level since Jan. 23rd. The euro bought $1.3705 from $1.3720 yesterday, when it fell to $1.3698, the lowest since Feb. 28rd. The single currency lost 0.2 percent to 142.28 yen. The greenback is headed for a 1.1 percent gain against the yen and a 0.3 percent advance against the euro this week. The euro has risen 0.6 percent against its Japanese peer.
New Zealand’s currency was little changed at 85.47 U.S. cents, set for a decline this week of 1.3 percent. That would be the biggest since a 1.6 percent drop in the period through Jan. 31st.
The dollar traded near the highest level in 10 weeks against the yen before the U.S. is forecast to report the fastest jobs growth in four months.
Bonds briefing
Benchmark 10-year yields were little changed at 2.79 percent early in London. The price of the 2.75 percent security due in February 2024 was 99 5/8. While the yield has risen from 1.76 percent a year ago, it is less than the average over the past decade is 3.46 percent. Treasuries headed for a weekly loss before jobs data that may lead the Federal Reserve to keep cutting its debt purchases and usher in a “tightening season” of higher interest rates.
