France’s trade balance came in below expectations at €5.7bn this morning, worse than the €4.6 bn predicted by analysts polled and an increase on the €4.8 bn print from the previous month. Whilst not a huge miss the figure does add to the belief amongst many analysts that France still has some distance to travel in order to exit recession.
In the UK there’s been a flurry of frenetic action in the retail sector of the equity markets this morning as several behemoth retailers have announced their figures, or issued profit warnings. Morrisons has shocked the City, It’s like-for-like sales slumped by 5.6% in the last six weeks, which it’s blaming on hard pressed consumers cutting back. M&S’s clothing sales have fallen by another 2.1% in the last thirteen weeks of 2013, which is the 10th consecutive quarterly decline in a row. At Tesco, the outlook is no better. It’s like-for-like sales fell by 2.4% during the last six weeks.
This activity comes just as the ONS has published its latest data on the UK’s trade balance which is naturally mired in deficit.
The UK’s latest quarterly trade deficit for 2013 is just under £30 billion, however, the stand out figure, which may cause analysts to sit up and take notice, is that UK exports fell by 3% in the last quarter, rather demolishing the belief that the UK’s recession is so far back in the rear view mirror as to be an irrelevance. With these types of figures from the ONS, combined with poor retail data, it could appear to many observers that the UK is walking a tightrope of economic performance. And whilst undoubtedly the GDP figures for the last quarter of 2013 will cause UK annual growth to breach 2%, the first quarter of 2014, particularly for an economy 70% reliant on consumers to propel it forward, may come in far below analyst expectations suggesting that the UK’s economic performance may have reached a recent high water mark level.
Strong retail sales in Australia and falling inflation in China failed to lift equity markets in the Asia-Pacific region. Most markets drifted sideways or fell, whilst Japanese stocks erased much of Wednesday’s gains.
Chinese inflation slowed in December, the government’s campaign to control spending by officials made an impact on the wider economy. The consumer price index fell to 2.5 per cent from 3.0 per cent in November. It was a seven-month low, reversing the trend of higher year-end inflation. Food prices, the primary cause of the slowdown, rose 4.1 per cent year-on-year in December, down from 5.9 per cent in November.
UK Trade, November 2013
Seasonally adjusted, the UK’s deficit on trade in goods and services was estimated to have been £3.2 billion in November 2013, compared with a deficit of £3.5 billion in October 2013. There was a deficit of £9.4 billion on goods, partly offset by an estimated surplus of £6.2 billion on services. In November 2013, exports of goods to countries within the European Union (EU) increased by £0.6 billion to £12.8 billion. Over the same period imports from the EU increased by £0.5 billion to £19.2 billion, a record high.
The deficit on trade in goods increased by £1.8 billion to £29.2 billion in the three months to November 2013 from £27.4 billion in the three months to August 2013. Exports of goods in the three months to November 2013 decreased by 3.0% to £75.2 billion, but were 1.5% higher than in the same three months in 2012. Imports of goods decreased by 0.6% in the three months to November 2013 to stand at £104.4 billion, but were 2.2% higher than in the same three months in 2012.
Chinese Consumer Prices Cool to 2.5%
Chinese consumer prices climbed 2.5% year-over-year in December. This was less than expectations for a 2.7% rise, and down from 3% the previous month. Food prices tend to pick up toward the end of the year and therefore, CPI is expected to moderate slightly, despite the high base effect.
Australia Retail Trade up by 0.7%
The trend estimate rose 0.5% in November 2013. This follows a rise of 0.5% in October 2013 and a rise of 0.5% in September 2013. The seasonally adjusted estimate rose 0.7% in November 2013. This follows a rise of 0.5% in October 2013 and a rise of 0.9% in September 2013. In trend terms, Australian turnover rose 4.1% in November 2013 compared with November 2012. The following industries rose in trend terms in November 2013: Cafes, restaurants and takeaway food services (1.1%), other retailing (0.9%), Food retailing (0.3%), Clothing, footwear and personal accessory retailing (1.2%).
Market snapshot at 10:15 am UK time January 9th
The ASX 200 closed up 0.16%, the CSI 300 down 0.88%, the Hang Seng closed down 0.91%, with the Nikkei down 1.50% on the day. Europe has seen a negative open now reversed for the majority of the main bourses; euro STOXX up 0.45%, CAC up 0.25%, DAX up 0.41%, and the UK FTSE up 0.29%.
Looking towards the USA open the DJIA equity index future is up 0.32%, with price around 40 points below the 16,500 handle. The SPX future is up 0.29%, with the NASDAQ future up 0.26%.
NYMEX oil is up 0.42% in early trade at $92.72 per barrel, with NYMEX nat gas down 1.19% at $4.17 per therm. Gold on COMEX is up 0.10% at $1226.70 per ounce, with silver up 0.11% at $19.56 per ounce.
Forex focus
The euro climbed 0.2 percent to $1.3598 early London time after dropping to $1.3554 Wednesday, the weakest since Dec. 5th. The common currency advanced 0.2 percent to 142.66 yen. The dollar was little changed at 104.92 yen after climbing to 105.44 yen on Jan. 2nd, the highest since October 2008.
The euro strengthened from near a five-week low versus the dollar amid speculation European Central Bank policy makers meeting today will refrain from increasing stimulus amid signs the region is recovering.
The Dollar Spot Index, which tracks the U.S. currency versus 10 of its major counterparts, was little changed at 1,028.26 after rising to 1,030.18, the highest level since Sept. 9th.
The Aussie slid 0.3 percent to 88.72 U.S. cents late in Sydney, and fell 0.2 percent to NZ$1.0751. On Dec. 18th, it reached 88.21 U.S. cents, the weakest since August 2010, and touched NZ$1.0733, a level unseen since October 2008. New Zealand’s currency lost 0.1 percent to 82.53 U.S. cents.
The Australian dollar fell 0.3 percent to 93.07 yen, while the New Zealand dollar declined 0.1 percent to 86.56 yen. Australia’s dollar fell for a third day versus the greenback amid speculation U.S. payrolls data tomorrow will encourage the Federal Reserve to continue tapering stimulus that has boosted asset prices around the world.
The Australian dollar has fallen 16 percent against the greenback in the past 12 months, the most after the yen among Group of 10 currencies. It has declined 14 percent against its New Zealand counterpart.
Bonds
Benchmark 10-year yields were little changed at 2.98 percent early in London. The price of the 2.75 percent note due in November 2023 was 98. Thirty-year bonds yielded 3.89 percent. The difference between Treasury 10-and 30-year yields approached the narrowest level in three years on speculation slow inflation will help spur demand at a bond sale today.
