Investors and traders have experienced a quiet two news days overall this week with Australian data dominating the high impact news landscape. House prices in Australia rose by 3.4% in the quarter and by circa 9.3% overall throughout 2013. Sydney with a 13.8% annual rise took first place in what (on the face of it) appears to be a re-emergence of an over-heating Aussie property market. Although housing finance has only risen marginally, certainly not keeping pace with house price rises, perhaps suggesting that overseas cash buyers, in particular from Asia and more specifically China, are pushing up prices. In other Australian news business confidence has risen for the first time in over four months with the NAB business survey publishing a reading of 8 for overall confidence.
In the UK the latest retail report has been published overnight posting a healthy perspective for many involved in the UK retail industry. From online to the high street, according the BRC – the British Retail Consortium, retail sales are now at their strongest level since 2010. Up 3.9% in 2013 versus 1.9% in 2012. Of particular note was the 19.2% increase in online non-food sales suggesting that many new adopters are becoming very comfortable buying online.
If investors and analysts are struggling to find a reason why the UK is suddenly enjoying a secular retail boom we need look no further than the misspelling scandal of personal insurance. In the UK the average pay out has been circa £3K and the belief is that the circa three billion sterling paid out to date, has gone straight into the retail market on luxury goods and services such as cars and holidays. There is still plenty of claims in the pipeline therefore this retail boom may continue throughout 2014.
The BRC data leads the government-released retail data by about 10 days, but has a narrower focus as it only includes retailers who belong to the BRC. Full reports are only available to BRC subscribers. It’ll be interesting therefore to note how this data stands up to closer scrutiny versus the ‘official’ ONS data published next week.
US and European markets might have been becalmed yesterday, however, Asian markets continued to climb ahead of Janet Yellen’s first public appearance as US Federal Reserve chairwoman. Major indices in the region were positive, with Hong Kong’s Hang Seng leading in its third climb in four sessions.
NAB: Business Confidence Rises For The First Time In 4 Months
Australian business confidence neared a three-year high last month, and it looks like conditions are finally catching up. Results of NAB’s monthly business survey, released this morning, put conditions up 1 point during the month to 4, while confidence rose 2 points to 8. “Business conditions consolidated the strong pick up in December, reaching an almost 3 year high,” NAB reported. “Overall conditions are still chasing confidence, but are now close to their long run average.” Breaking the index, down there is good and bad news in the sub-indices.
Australia Housing Finance
The trend estimate for the total value of dwelling finance commitments excluding alterations and additions rose 1.8%. Investment housing commitments rose 3.0% and owner occupied housing commitments rose 1.0%. In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions rose 0.2%.
Australian House Price Indexes
Preliminary estimates show that the price index for residential properties for the weighted average of the eight capital cities rose 3.4% in the December quarter 2013. The index rose 9.3% through the year to the December quarter 2013. The capital city residential property price indexes rose in Sydney (+4.7%), Melbourne (+2.6%), Perth (+3.3%), Brisbane (+2.8%), Adelaide (+2.5%), Hobart (+2.0%), Darwin (+1.7%) and Canberra (+0.3%). Annually, residential property prices rose in Sydney (+13.8%), Perth (+8.7%), Melbourne (+7.9%), Brisbane (+5.7%), Darwin (+5.0%), Hobart (+4.9%), Adelaide (+3.4%).
BRC- KPMG Retail Sales Monitor January 2014: Strongest sales growth since March 2010
UK retail sales were up 3.9% on a like-for-like basis from January 2013, when they had increased 1.9% on the preceding year. On a total basis, sales were up 5.4%, against a 3.0% increase in January 2013, the strongest growth since March 2010. The 3-month average total growth was 3.2%, back in line with the 12-month trend, now at 3.0%. Furniture was the top performing category, achieving its best growth since April 2006, while Other Non-Food was the key contributor to overall growth. Online sales of non-food products in the UK grew 19.2% in January versus a year earlier, the strongest January since 2009.
Market snapshot at 10:00 am UK time
The ASX 200 closed up 0.62%, the CSI 300 up 0.80%, the Hang Seng up 1.79%. European indices have opened in positive territory; with the STOXX up 0.97%, CAC up 0.75%, DAX up 1.08%, FTSE up 0.75%. The DJIA equity index future is up 0.42%, SPX 0.44%, NASDAQ up 0.44%.
NYMEX WTI oil is up 0.13% at $100.19 NYMEX nat gas is up 1.07% at $4.63 per therm. Gold on COMEX is up 0.64% at $1282.80 per ounce with silver at $20.09 per ounce down 0.11%.
Forex focus
The Aussie currency rose 0.7 percent to 90.07 U.S. cents early in London, after touching the highest since Jan. 14th at 90.15. The dollar traded at 102.33 yen from 102.26 yesterday, when it reached 102.64, the strongest since Jan. 31st. It weakened 0.1 percent to $1.3660 per euro. The yen fell 0.2 percent to 139.78 versus Europe’s shared currency. The euro fell 0.5 percent to A$1.5166 after touching A$1.5024 on Feb. 6th.
Australia’s dollar reached a four-week high after home prices and business sentiment climbed. Demand for the greenback against the yen was limited before Federal Reserve Chairman Janet Yellen speaks to U.S. lawmakers.
The pound was little changed at $1.6397 early London time after climbing to $1.6434, the strongest level since Feb. 3rd. The U.K. currency was at 83.32 pence per euro. The pound climbed to the strongest level in a week against the dollar after an industry report showed U.K. retail sales growth accelerated in January, adding to evidence the recovery is gaining momentum.
Bullion for immediate delivery gained as much as 1 percent to $1,287.81 an ounce, the highest price since Nov. 18th and was at $1,283.85 midday in Singapore. Gold rallied to the highest level since November as investors assessed further cuts to U.S. stimulus and Chinese buyers increased purchases to extend last year’s record consumption. Silver, platinum and palladium rose.
Bonds briefing
The yield on the USA benchmark 10-year note added one basis point to 2.68 percent early in London after falling three basis points in the prior two sessions. The price of the 2.75 percent note due in November 2023 dropped 2/32, or 63 cents per $1,000 face amount, to 100 5/8. A basis point is 0.01 percentage point. Treasuries snapped their two-day gain before Federal Reserve Chairman Janet Yellen testifies to lawmakers today as investors assess whether U.S. recovery is strong enough to withstand cuts in monetary stimulus.
