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Financial markets review – 15th April 2016

Monday 11 April

  • Italian officials and financial institutions have agreed on the terms for a €5bn bailout fund aimed at shoring up the weaker banks through raising capital and unloading bad loans.
  • China’s official CPI for March came in below expectations at 2.3% (vs. 2.5% expected).
  • Japan’s core machinery order for February showed a smaller MoM decline of -9.2%, compared to the expectation of a 12.4% fall.

Tuesday 12 April

  • The IMF cut its global growth forecast for 2016 from the previous 3.4% forecast made in January to 3.2%, whilst also mentioning the possibility of the UK leaving the EU causing severe global damage.
  • There were mixed market and policy commentaries from several Fed officials, Harker and Kaplan highlighted their conservative stance regarding interest rate changes, whilst San Francisco Fed President Williams expects 2 or 3 rate hikes to be reasonable, assuming there is no surprise in the economic data.
  • In Europe, the final revisions for Germany’s March CPI report was confirmed at +0.8% MoM and +0.3% YoY. The inflation number in the UK showed a slightly higher than expected CPI print of +0.4% MoM (vs. +0.3% expected).
  • In the US, the import price index came in slightly lower than expected +0.2% MoM (vs. +1.0% expected), whilst the March Monthly Budget Statement revealed a modestly wider than expected deficit ($108bn vs. $104bn expected).

Wednesday 13 April

  • In the US headline sales showed a decline of -0.3% MoM in March, this was well below market expectations of +0.1% MoM. The March PPI was also weaker as headline producer prices came in below market at -0.1% mom (vs. +0.2% expected), with the core of 0.0%.
  • The Canadian Central Bank kept its interest rate unchanged at 0.50%.
  • In Europe we saw the Euro area industrial production reading come in a little softer than expected at -0.8% MoM (vs. -0.7% expected), the single largest monthly decline in 18 months. Meanwhile, in France we saw the final March CPI report confirmed at +0.7% MoM which was unchanged on the earlier initial estimate.
  • China’s March trade balance came in marginally below expectations at $29.9bn, compared to the forecast of $30.8bn.

Thursday 14 April

  • The Euro area core CPI for March showed there were no changes in price level, against a market expectation of a -0.1% drop.
  • Australia employment data came in better than expected as 26.1k new jobs were created in March, compared to a consensus of 20k.
  • Bank of America and JP Morgan reported quarterly revenues slightly below street expectations, whilst earnings pretty much matched expectations. Wells Fargo actually beat both the revenue and earnings line.
  • US inflation came in a touch lower than expected at both the headline (+0.1% MoM vs. +0.2% expected), and core (+0.1% MoM vs. +0.2% expected) which had the effect of knocking down the YoY rates for both to +0.9% and +2.2% respectively.

Friday 15 April

  • Chinese GDP came out at 6.7% YoY for the first quarter of 2016, in line with expectations and down from 6.8% of the previous quarter. Industrial production printed well above expectations in March (+6.8% YoY vs. +5.8% expected), along with retail sales (+10.5% YoY vs. +10.4% expected) and fixed asset investment (+10.7% ytd YoY vs. +10.4% expected).
  • Industrial production in Japan came out better than expected (-5.2% MoM vs -6.2% expected).
  • Industrial production in US came out worse than expected (-0.6% MoM vs -0.1% expected).
IndexActual priceWeek to dateMonth to dateYear to date
S&P 5002081.61.71.11.8
Eurostoxx 600342.63.21.5-6.3
Nikkei16848.06.50.5-11.5
MSCI Emerging Markets845.53.51.06.5
FTSE 1006343.492.242.731.62
Treasury yield 10 years1.750.03-0.02-0.52
Bund yield 10 years0.130.03-0.03-0.50
Gilt yield 10 years1.410.05-0.01-0.55
USD vs Sterling1.4190.40-1.22-3.74
Sterling vs Euro0.7961.29-0.49-7.47
USD vs Emerging Markets FX68.5771.130.044.48
Commodity Index172.81.01.3-1.9
Gold1229.3-0.9-0.315.9
Brent Oil42.41.27.113.8

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