Financial markets review – 29 April 2016

Monday 25 April

• In the US new home sales declined in March (-1.5% MoM vs. +1.6% expected) to an annualised rate of 511k.
• Dallas Fed announced that the regional manufacturing survey data for April was weaker than expected at -13.9 (vs. -10.0 expected), a slight weakening from the -13.6 in the prior month.
• In Europe, the only data of note came out of Germany where the IFO business climate survey was little changed from March at 106.6 (below expected of 107.1).

Tuesday 26 April

• In the US, headline durable goods orders were reported as increasing +0.8% MoM (vs. +1.9% expected) with the ex-transportation reading (-0.2% MoM vs. +0.5% expected) also missing. Core capex orders were unchanged in March (vs. +0.6% expected), whilst shipments rose less than expected +0.3% MoM (vs. +0.9% expected).
• April consumer confidence index reading fell 1.9pts to 94.2 (vs. 95.8 expected). There was further evidence of disappointment in the manufacturing sector as we saw a decline in the Richmond Fed manufacturing survey by 8pts to 14 (vs. 12 expected). However, the flash April services PMI shows improvement as it rose 0.8pts to 52.1 (vs. 52.0 expected).
• Exxon Mobil was stripped of its AAA credit rating from S&P yesterday after being downgraded by one notch to AA+. According to Bloomberg, Exxon had held that rating since 1930 and it means the S&P AAA corporate club in the US public space now has just two members: Microsoft and Johnson & Johnson.

Wednesday 27 April

• The Federal Reserve published a statement following the conclusion of the FOMC meeting, suggesting they are still being cautious regarding a further rate hike but have left the door open for more action in the June meeting.
• The Bank of Japan kept its monetary policies unchanged in the policy meeting, contrary to market expectation. Japan’s Headline CPI was reported as dipping into negative territory at -0.1% YoY last month (vs. 0.0% expected), the first deflation reading since 2013. Core inflation also slipped into negative territory at -0.3% YoY (vs. -0.2% expected). This decision has caused JPY to sharply appreciate against USD.
• In the US, the March advance goods trade balance reading showed an unexpected shrinking of the deficit to $57bn from $63bn reflecting a sharp slowdown in imports. Meanwhile, the latest housing market data was reserved for the March pending home sales numbers which were reported as rising +1.4% MoM last month (vs. +0.5% expected).
• In Europe, the main focus data wise was on the ECB’s money and credit aggregates numbers for March which was up by +5.0% YoY as expected. The advance Q1 GDP reading for the UK printed as expected at +0.4% QoQ.

Thursday 28 April

• In the US the 2016 Q1 GDP print showed a disappointing growth at +0.5% QoQ (vs. +0.7% expected) as net exports contributed negatively while business fixed investment was also down sharply. The Q1 Core PCE print came in at +2.1% QoQ (vs. +1.9% expected) which was the highest level in four years. Initial jobless claims last month rose by 9k to 257k although still at historically low levels.
• In Europe, the flash April CPI numbers out of Germany printed at -0.2% MoM as expected. German unemployment was also noted as falling 16k last month.
• Eurozone consumer confidence for April was at -9.3, while economic confidence rose 0.9pts to 103.9 (vs. 103.4 expected). Both services and business climate indicator readings were reported as rising for April too.

Friday 29 April

• In Europe, French Q1 GDP beat expectations at 0.5% compared to a forecast level of 0.4%. Germany’s retailed sales also disappointed at -1.1% vs a forecast of 0.3%. Eurozone CPI for April was published at -0.2% YoY compared to an expected level of -0.1% which showed more deflationary pressure. French CPI is in line with expectations whilst Italian CPI for April came in below forecast at -0.4% YoY.
• In the UK the BoE consumer credit showed a large improvement at 1.88B compared to 1.30B expected.
• In Asia, Korea’s industrial production in March came in below expectation at -2.2% drop (forecast of 0.1% gain). Whilst in China the PBoC fixed up its currency against the USD by 0.6% due to the weakness of the dollars, which was on largest daily increase since 2005.