04.04.14 Friday Evening

Global markets started the week strongly as investors looked towards a week full of macro-economic data and important speeches by highly influential individuals. Asia kicked off the week in positive territory as investors held onto speculation that China would introduce new steps to stimulate its economy as recent figures have clearly shown a slow-down. Later in the week, China did in fact make significant moves forward to stimulate their economy, doing this by cutting taxes for small businesses. The Chinese cabinet also revealed they are set to speed up the construction of railway lines and increase the length of lines being laid by 18%.

The Euro started the week near its one-month lows; however it slightly jumped against its major counterparts later in the day as Eurozone inflation was revealed to have dropped to 0.5% - its lowest level in over four years. The lower than expected inflation data puts further pressure on the European Central Bank to act sooner.

Stock markets in America followed suit from around the globe, opening higher and continuing significant gains throughout the day as Janet Yellen spoke out at a conference in Chicago regarding the Federal Reserve's planned tapering of asset purchases. Yellen eased the nerves of investors by saying the Fed's policy was “still needed and will be for some time to come”. She had spooked the markets last month by mentioning that interest rates could rise within six months of purchases ceasing altogether. The US dollar hit its two-year highs against the Yen during midweek trading; however investors will be keeping a close eye on Yellen to see if they can gauge any signs of an increase in interest rates. The S&P continued gains throughout the week with the Index closing at record highs on Wednesday evening. The Dow Jones also had consecutive gains throughout the week, getting ever closer to record high levels.

Asian stock markets extended their gains throughout its session on Tuesday, continuing its consecutive gains it had seen for the past week. A mix of US manufacturing data, optimism about global growth and macro-economic data saw investors remain extremely bullish. As global stock markets continued to rally throughout the week, it seemed to curb demand for safe havens with both Gold and Silver trading near their 7-week lows in the week.

US ADP non-farm payrolls rose by 191,000 in March, slightly lower than the estimated figure of 192,000. The figure didn’t prompt any significant moves in markets; however the Dow Jones spiked slightly off the back of the data before shaving off the gains. Prior to the payroll data on Wednesday, GBP Construction PMI came in lower than expected at 62.5 and on Thursday, Services PMI also came in lower at 57.6. GBP/USD took a hit after these figures were released with steep spikes down before gaining back some of the losses. Despite the construction figure being below consensus, the figure still shows a strong construction industry influenced by the surge in new homes by government initiatives.

Australian trade balance significantly beat expectations on Thursday with the figure coming in at $1.2bn; the 2nd month in a row that the balance has been above $1bn. Australian retail sales were also released alongside the trade balance, coming in slightly lower than expected at 0.2%.

Friday’s non-farm payroll figure came in slightly worse than expected at 192,000, just short of the estimated 199,000 figure. The usual levels of volatility surrounded the number however markets soon calmed down and traded at the positive pre-data level shortly after.

Stock of the week – Google

The hotly-anticipated Google stock split finally happened yesterday which saw the stock split into two individual shares; Google A (GOOGL) and Google C (GOOG). The class A shares will retain the voting rights whilst class C will lose the voting rights.

Economic Data:

 

Monday

-          EUR German Industrial Production @ 11.00am

 

Tuesday

-          AUD NAB Business Confidence @ 02.30am

-          GBP Manufacturing Production @ 09.30am

-          USD JOLTS Job Openings @ 15:00pm

 

Wednesday

-          FOMC Meeting Minutes @ 19:00pm

 

Thursday

-          AUD Employment Change @ 02.30am

-          AUD Unemployment Change @ 02.30am

-          GBP Asset Purchase Facility @12:00pm

-          GBP Official Bank Rate @ 12:00pm

-          USD Unemployment Claims @ 13:30pm

 

Friday

-          CNY CPI @ 02:30am

-          USD PPI @ 13:30pm

-          USD Prelim UoM Consumer Sentiment @14:55pm

 

Earnings:

 

Tuesday

-          Matchtech Group – Interim 2013/14 earnings

 

Wednesday

-          Bond International Software – Prelim 2013 Earnings

-          WS Atkins – Trading Statement