Weekly Trading Update, 06/03/2015

Europe
Whilst the Greece issue receded into the background (for now), the Eurozone remained the focus of the week due to an ECB conference on Thursday that promised to further outline the quantitative easing plan announced in January. This was prefaced by strong retail sales, manufacturing and composite PMI for the region, whilst services PMI slipped. However all this was quickly forgotten come Thursday, and as Draghi largely confirmed what was already known, (bond buying to begin on March 9th until September 2016 at €60 billion a month) the markets rocketed up the charts.

With GDP revised up for the next 3 years, and inflation set to fall for 2015 before increasing in 2016 and 2017, the DAX reached fresh record highs following the conference. The euro, on the other hand, hit 12 years lows in the aftermath, with the chance for further declines when the bond buying actually begins.

The biggest news next week will of course be the actual start of the newly labelled ‘Public Sector Purchase Programme’. However, there is also the likelihood that Greece will rear its troublesome head once more with a Eurogroup meeting on Monday sure to contain more rumination on the financial health of Athens. Elsewhere, a flurry of industrial production data for the region and some final CPI figures rounds out the week for the Eurozone.

US

After reaching new highs on Monday, the US markets spent much of the week slipping away from these levels, only marginally stalling their fall following the boost provided by the ECB. The issue, as has been a regular occurrence of late, is the inability of the US data to meet expectations. Weak ADP non-farm figures were the killer this week, the missed targets sinking the Dow Jones on Wednesday. This was joined on Thursday by the third jobless claims figure over 300k in 4 weeks, sliding factory orders and a weak productivity revision. None of this mattered come non-farm time, as the figure smashed expectations arriving at 295,000 compared to the 240,000 forecast; however wage growth fell and the markets responded with a shrug, continuing to decline.
 

For all this market weakness, the US dollar unsurprisingly remains strong, making further gains on Thursday as the euro sank further into its ECB QE mire. Next week is fairly quiet for the USA, with Friday being the main focus seeing retail sales, more unemployment claims, import prices and business inventories.

UK
The UK followed the same trends as the Eurozone this week; highs on Monday, prompted by strong manufacturing data were then joined by better than expected construction PMI on Tuesday morning. However, by Tuesday afternoon the FTSE was in a much worse state and come the closing bell on Wednesday had lost the gains the UK index had made the week before. Thursday then saw the Bank of England unsurprisingly keep the record low interest rates, causing this phenomenon to enter its 7th year of existence; this phased no-one as the FTSE focused on the ECB statement, recovering most of its mid-week losses by the end of the day.

Economic data is once again sparse on the ground in the UK next week, with only manufacturing production, the NIESR GDP estimate and trade balance of any not, so expect the FTSE to be led by the likely movements in the Eurozone and America as the week continues.

Commodities
In what is a fairly positive sign, it was a quiet week for Brent Crude oil. After a 3.5% fall saw it lose its $62 per barrel level on Monday, the commodity then settled into around $60 per barrel for the rest of the week, even weathering a much higher than expected 10.3 million US crude inventories figure. This is roughly the 5th consecutive week of a $60 per barrel performance from oil, and shows no sign of stalling as it grows in resilience.

Copper reached $2.70 per pound on Monday after the combination of a Chinese central bank rate cut and stronger Chinese manufacturing data; however the metal lost this as the week went on as investors failed to justify its new price. With lots of Chinese industrial data next week it is unclear which way copper will go; if the Chinese data follows its recent upward trend then the metal could see a return to its Monday levels.

Gold had a dismal week, with 5 days of consecutive losses as the US dollar ate into whatever marginal gains the metal had made. The post-ECB euro plunge merely added to the dollar’s strength, and on Thursday caused gold to close below $1200 for the first time in weeks.

Stock of the week: Hikma Pharmaceuticals
This Wednesday saw the results of the FTSE quarterly review, and there was only one switcheroo on the FTSE100. Tullow Oil, unsurprisingly, slipped out of the top tier following a dismal 6 months were it lost around £1.3 billion of its market cap in the midst of the oil price crash. The winner of this situation was Hikma Pharmaceuticals; only floated in 2005, Hikma became the latest member of the FTSE100, with its £24.70 per share price leaving it roughly 80th on the index.

(Source: IT-Finance.com)

Economic Diary, 9^th to 13^th March 2015

 

Monday 9^th March

All Day – Eurogroup Meetings

7.00am – EUR German Trade Balance

5.01pm – USD 10-y Bond Auction

 

Tuesday 10^th March

Tentative – CNY Trade Balance

1.30am – CNY CPI y/y

1.30am – CNY PPI y/y

7.45am – EUR French Industrial Production m/m

9.00am – EUR Italian Industrial Production m/m

2.00pm – USD JOLTS Job Openings

11.50pm – JPY Core Machinery Orders m/m

 

Wednesday 11^th March

Tentative – CNY New Loans

5.30am – CNY Industrial Production y/y

5.30am – CNY Fixed Asset Investment ytd/y

9.30am – GBP Manufacturing Production m/m

9.30am – GBP Industrial Production m/m

2.30pm – USD Crude Oil Inventories

3.00pm – GBP NIESR GDP Estimate

11.50pm – JPY BSI Manufacturing Index

11.50pm – Tertiary Industry Activity m/m

 

Thursday 12^th March

5.00am – JPY Consumer Confidence

7.00am – EUR German Final CPI m/m

7.45am – EUR French CPI m/m

9.30am – GBP Trade Balance

10.00am – EUR Industrial Production m/m

12.30pm – USD Core Retail Sales m/m

12.30pm – USD Retail Sales m/m

12.30pm – USD Unemployment Claims

12.30pm – USD Import Prices m/m

2.00pm – USD Business Inventories m/m

 

Friday 13^th March

9.30am – GBP Construction Output m/m

12.30pm – USD PPI m/m

12.30pm – USD Core PPI m/m

2.00pm – USD Prelim UoM Consumer Sentiment

 

Earnings releases, 9^th to 13^th March 2015

 

Monday 9^th March

Gemfields PLC – Half Year 2015 Earnings Release

Abcam PLC – Half year 2015 Earnings Release

Urban Outfitters Inc – Q4 2014 Earnings Release

 

Tuesday 10^th March

esure Group PLC – Full Year 2014 Earnings Release
Cairn Energy PLC – Full Year 2014 Earnings Release

Prudential PLC – Full Year 2014 Earnings Release

Ocado Group PLC – Q1 2015 Earnings Release

Barnes & Noble Inc – Q3 2015 Earnings Release

 

Wednesday 11^th March

Centaur Media PLC – Full Year 2014 Earnings Release

Foxtons Group PLC – Full Year 2014 Earnings Release

Shake Shack Inc – Q4 2014 Earnings Release

 

Thursday 12^th March

Cineworld Group PLC – Full Year 2014 Earnings Release

Volkswagen AG – Full Year 2014 Earnings Release

WM Morrison Supermarkets PLC – Preliminary Results Announcement

 

Friday 13^th March

JD Wetherspoon PLC – Interim Results Statement