Daily Briefing – Monday March 6, 2017
With stock markets across Europe seemingly resilient to political uncertainty concerning upcoming French and Dutch elections, consumer confidence today should see and increase. In spite of achieving (and in many cases crossing) inflation targets in last week’s data, the ECB is expected to continue its dovish stance, this coming Thursday. Services PMIs for the zone came in lower than expected for February – except in Italy and Spain, where they exceeded expectations nicely – and retail sales fell for the 3rd month in a row. And Britain’s services sector growth was recorded as the slowest in five months. Manufacturing, on the other hand, is growing at a 3-year record pace, according to a survey by EEF and BDO. General Motors has announced it would sell its stake in German car maker, Opel to Peugeot and BNP Bank, Paris for 2.2 bn Euros. As opposed to Ford and Fiat/Chrysler, which recently turned profitable in Europe, Opel has continuing bleeding GM to the tune of $1bn yearly. Opel began manufacturing sewing machines in 1862 and bicycles in 1886. They launched into automobiles in 1899 and were purchased by General Motors in 131.
Friday’s news was dominated by Fed Chair Janet Yellen’s speech, in which she confirmed that the US central bank’s interest rate will be increased unless next week’s employment numbers are surprisingly weak. The dollar index responded by losing an entire percent over the weekend, but seems to have now reversed back upward; and stock indexes fell harshly – the S&P losing 10 points in the half hour before closing, the Nasdaq 25 and the DJIA more than 100.
The Yen overnight took up US slack by rising sharply by 80 pips. And, responding perhaps to US President Trump’s demand for increased defense spending, China has announced a 1 trillion yuan budget this year of its own – up 7% from last year. Additional announcements over the weekend include a cut in coal and steel overcapacity – bad news for neighboring Australia, where the AUD fell 12 pips against the US dollar, in spite of a retail sales rebound for January – reported just after midnight yesterday. Premiere Li Keqiand, delivering his annual report to the National People’s Congress has ascribed the move to a desire to cut back on pollution and shift towards cleaner forms of energy.
Oil has broken down from its recent sideways trend and may be headed south, following Friday’s Baker Hughes oil rig count – up 7 to 609 operating drills. Russia – expected to cut production – continues to abide by pre-freeze agreement quotas, in spite of OPEC adherence; and China’s hopes to achieve a 6.5% growth target indicates and increased need for oil during the coming year.
|9:30 AM GMT||EU: Sentix Investor Confidence Index|
|3 PM GMT||US: Factory Orders|
|1 AM GMT (+1)||China: Foreign Exchange Reserves and interest rate decision|
|3:30 AM GMT (+1)||Australia: Interest Rate Decision|