Daily Briefing – Wednesday, February 1, 2017
The dollar index soared in Asian trading overnight by a full cent (1.6 for the dollar-yen pair) after focus shifted from Trump’s speech to congress last night – high on pronouncements, low on details – to a March interest rate hike. San Francisco Fed President John Williams and New York Fed President William Dudley both stated that the March hike is definitely on the table, following yesterday’s report of a 1.9% increase in GDP, a widening trade deficit of $69 bn, a 3% increase in consumer spending and a soaring (114.8) consumer confidence. All 3 major stock indexes closed down – the S&P500 by 0.26% and the Nasdaq – 0.62%. The New York Teamsters (truck drivers) pension fund is the first to “officially run out of money”, as the Pension Benefit Guaranty Corporation steps in to guarantee payment – though at a cut rate. According to a story yesterday in the New York Daily News, next in the domino list will be 407,000 members of the Central States Pension Fund for municipal and state employees.
Chinese and Hong Kong indexes closed slightly up this morning, with the Nikkei soaring y 1.45%, following the US presidential speech to congress, but more so, the words of US fed heads. While Japan’s Nikkei Manufacturing PMI remained almost level, both China’s figures exceeded expectations – 51.6 and 51.7 for the NBS and Caixin, respectively – marking an expanding sector for the 7th month in a row and paving the way for planned economic reforms. Australia’s economy also grew well beyond expectations, based on this morning’s GDP figures for last year’s final quarter. The year-on-year’s 2.4 beats both Q3’s 1.8 and Q4 expectations of 1.9. Thanks are to rebounding commodity prices and a gradual transition towards a broader-based economy. And South Korea’s export figures are also up 20% for February – an indication of improvement in the global climate in general.
European indexes were relatively flat to positive yesterday, with Spain’s IBEX being the best performer, at +0.96%. Still at 14-month peaks, they were pressured down on commodity shares and a rapidly disappearing advantage for Germany’s Angela Merkel against her social democrat rivals. The EU’s fastest growing economy, Ireland’s manufacturing PMI was down 2 points. And, finally, following a year of negotiations, the London Stock Exchange – German Bourse merger is dead, following the LSE’s refusal to abide by EU demands it sell its Italian MTS platform and Germany’s demands that the new firm be based in Frankfurt. The British pound traded somewhat higher during the Asian session, especially after BRC shop price figures overnight show a 1% decrease for February, with food prices rising for the 1st time in a year. Housing prices are up 4.5% year-on-year, and the nation’s manufacturing PMI is expected to see a ½ point fall.
Oil saw yet another 2.5 mB crude inventories increase, which resulted in a monetary dip from above $54 a barrel of WTI to 53.20. Prices have returned, but the commodity continues to trend sideways. And gold lost $22 per troy ounce on yesterday’s US dollar news, but continues to hold above previous resistance in the 1242 region.
|8:55 AM GMT||Germany: Markit manufacturing PMI followed 5 minutes later by unemployment numbers and the PMI for the EU. Germany’s CPIs at 1 PM.|
|9:30 AM GMT||UK: Manufacturing PMI, Consumer Credit and Mortgage Approvals|
|1:30 PM GMT||US: Personal Spending, Consumption & Income, followed at 2:45 by Markit’s Manufacturing PMI and the ISM number at 3.|
|3 PM GMT||Canada: Interest Rates|
|3:30 PM GMT||EIA Crude Oil Stocks Change|
|0:30 AM GMT (+1)||Australia: Trade Balance|