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Financial markets review – 06 May 2016

Monday 02 May

  • China’s official manufacturing PMI for April showed a modest decline of 0.1pts to 50.1 (vs. 50.3 expected) while the non-manufacturing PMI also dropped by 0.3pts to 53.5.
  • In the US, ISM manufacturing data was printed at 50.8 in April which was down by 1pt from March and more than what the market had expected (consensus expectation was for 51.4). The manufacturing PMI was unchanged in the final revision. Employment rebounded but still remains in contractionary territory, new export orders also showed positive.
  • In Europe the main data flow was the April manufacturing PMI’s. The Euro area reading was revised up a modest 0.2pts to 51.7 whilst both Germany (-0.1pts to 51.8) and France (-0.3pts to 48.0) had a drop, and the peripherals generally exceeded expectations with Italy printed at 53.9 (vs. 53.0 expected), and Spain printed at 53.5.

Tuesday 03 May

  • In China the non-official Caixin manufacturing PMI showed a 0.3pt decline to 49.4 (vs.49.8 expected).
  • Reserve Bank of Australia announced a 25bps cut in the benchmark rate to a new all-time low of 1.75%, which was unexpected by many economists and investors.
  • In the US Presidential Election race. After Trump secured the Indiana primary, Ted Cruz has decided to withdraw from the Republican race which all but confirms Trump as the Republican nominee.
  • In Europe the main data of note was out of the UK where the April manufacturing PMI came in at a disappointing 49.2 – the first sub 50 reading for 3 years. Elsewhere the Euro area PPI reading printed higher than expected last month at +0.3% mom (vs. 0.0% expected).

Wednesday 04 May

  • Mixed data release in the US as services ISM beat expectation (55.7 vs. 54.8 forecast), where employment, new orders and prices paid all rose from last month, although there was a slight decline for business activity and new export orders. The March trade deficit also narrowed to $40.4bn (vs. $41.2bn expected). Final services PMI in April was revised up which showed a gain compare to March. Factory orders rose more than expected in March, whilst Q1 non-farm productivity weakens.
  • In Europe the main focus was on the release of the remaining PMI’s where we saw the final April services reading revised down to 53.1. On country level we saw marginal downward revisions to Germany and France while Italy was the positive surprise as its services reading printed ahead of expectations (52.1 vs. 51.9 expected; 51.2 March).

Thursday 05 May

  • China’s Caixin service PMI for April showed a slightly disappointing drop of 51.8 (vs forecast of 52.6).
  • Australia’s retail sales in March beats expectation at 0.4% (versus 0.3%).
  • In Europe the main data update was the UK Service PMI in April which showed a slightly weaker than expected figure of 52.3 compare to 53.5.
  • In US the initial jobless claim revealed an uptick in the number of claims last week to 274k (vs.260k expected), a rise of 17k from previous month also the highest reading in five weeks.

Friday 06 May

  • In the US, the non-farm payrolls for April showed the fewest monthly gain in number of jobs in 7 month, the 160,000 gain came in significantly below expectation of 202,000. Unemployment rate was in line with expectation at 5%, whilst hourly pay climbed by 0.3%.
  • Only data coming out of Europe was the Spanish Industrial Production, which should a YoY gain of 2.8% compare to 1.7% expected.
IndexActual priceWeek to dateMonth to dateYear to date
S&P 5002048.3-0.8-0.80.2
Eurostoxx 600331.3-3.0-3.0-9.4
MSCI Emerging Markets809.5-3.7-3.71.9
FTSE 1006101.07-2.26-2.26-2.26
Treasury yield 10 years1.76-0.07-0.07-0.51
Bund yield 10 years0.17-0.11-0.11-0.46
Gilt yield 10 years1.44-0.16-0.16-0.53
USD vs Sterling1.447-0.95-0.95-1.78
Sterling vs Euro0.789-0.71-0.71-6.62
USD vs Emerging Markets FX69.439-
Commodity Index178.9-3.1-3.11.5
Brent Oil44.9-6.8-6.820.3

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