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Financial markets review – 3rd June 2016

Monday 30 May

  • Japan reported a better than expected industrial production reading for April (+0.3% MoM vs. -1.5% expected).
  • European Commission’s economic sentiment index increased by 0.7pts in May to 104.7 (vs. 104.4 expected) which was the best reading since January. The consumer confidence reading for the Euro area was at -7 for May, whilst in Germany the headline CPI figure for May printed in line with expectations at +0.3% MoM. That had the effect of lifting the YoY rate to +0.1%, an increase of two-tenths. The other data was out of France where the preliminary Q1 GDP report came in a little better than expected at +0.6% QoQ (vs. +0.5% expected).

Tuesday 31 May

  • Q1 GDP data in Australia came in stronger than expected (+1.1% QoQ vs. +0.8% expected), which led to a rally in the Australian Dollar (+0.71%).
  • Japan officially announced the postponement of the April 2017 consumption tax until 2019, which reflects the weakness of its underlying economy.
  • China’s official manufacturing PMI for May was unchanged at 50.1 last month, a smidgen ahead of the consensus forecast of 50.0 and importantly marks the third consecutive above 50 reading.
  • In Europe, ECB’s latest money aggregates showed that the annual pace of Euro area money supply (M3) growth slowed in April to +4.6% YoY from +5.0%.
  • Euro area headline CPI May was down by 0.1% as expected with the core CPI drop by the same amount to +0.8% YoY. The wider Euro area unemployment rate was unchanged in April at 10.2%, whilst over in Germany the unemployment rate was down one to 6.1%. German retail sales were -0.9% MoM (vs. +0.9% expected).

Wednesday 01 June

  • The final Euro area manufacturing PMI reading was unchanged at 51.5 whilst Germany was notched down to 52.1 (-0.3pts) but France was revised up to 48.4 (+0.1pts). In the periphery however there were notable monthly declines for Italy (-1.5pts to 52.4), Spain (-1.7pts to 51.8) and Greece (-1.3pts to 48.4). For the UK the readings were more positive where the PMI rose 0.7pts to 50.1 (vs. 49.6 expected) and back into growth territory again.
  • In the US the latest vehicle sales numbers were published. Total sales rose in May to an annualised rate of 17.37m (vs. 17.3m expected).

Thursday 02 June

  • In the US we saw ADP reported a 173k private payroll gain in May – exactly in line with expectations. Initial jobless claims in the US last week were down a modest 1k to 267k (vs. 270k expected). The NY ISM survey had a 20pt decline in the index to 37.2pts in May.
  • The ECB held its policy meeting and kept its interest rate and stimulus package unchanged, and did not change its inflation forecast in 2017 and 2018.
  • The OPEC meeting took place in Vienna where its member nations failed to agree on production cap.

Friday 03 June

  • US nonfarm payroll for May showed a gain of 38,000 jobs, the fewest since September 2010 and was massively below the market expectation of 164,000, whilst unemployment rate stayed dropped to 4.7% compare to a forecast of 4.9%.
  • In the UK, May service PMI was reported as 53.3, beating market expectation of 53.1, whilst the German PMI for the same period was in line with expectation at 55.2.
IndexActual priceWeek to dateMonth to dateYear to date
S&P 5002105.
Eurostoxx 600344.0-1.6-1.0-6.0
MSCI Emerging Markets809.
FTSE 1006218.03-0.84-0.20-0.39
Treasury yield 10 years1.73-0.12-0.12-0.54
Bund yield 10 years0.08-0.06-0.06-0.55
Gilt yield 10 years1.29-0.15-0.14-0.67
USD vs Sterling1.453-0.660.30-1.43
Sterling vs Euro0.778-2.26-1.18-5.24
USD vs Emerging Markets FX66.684-0.18-0.081.59
Commodity Index188.
Brent Oil49.

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