10.04.15 Friday Morning

UK
The FTSE came roaring back after the Easter break, and is on track for 6 consecutive days of gains and the potential for a fresh all-time record high. Things got off to an exciting start on Tuesday when it was announced that Royal Dutch Shell was to buy BG for £47 billion, pushing the oil sector as a whole higher and in the process leading to impress gains for the UK index.

News that the UK saw the lowest clothing and food prices for 9 years in March, alongside very strong services PMI and an increase in March housing prices ensured that the FTSE continued its push. Thursday then saw it close firmly above 7000 despite the widening of the trade deficit, something that hurt the pound much more than the FTSE.

Looking ahead, next week is fairly busy for the FTSE, as the ongoing election campaign is joined by UK inflation data, alongside the unemployment rate, the claimant count change, and the carefully watched average earnings index.

US
The US markets saw gig growth on Monday when it was flying solo in the Western world. Bar a wobble on Tuesday they managed to continue to post gains, even if they lagged behind the pace set by their European cousins. A strong JOLT jobs openings figure on Tuesday further muddied the US jobs picture, something that was only exacerbated by the fact that unemployment claims worsened. The inconsistency in the jobs market at the moment is one of the key issues for the Fed; the latest meeting minutes from the central bank portrayed a split institution that hasn’t yet ruled out a 2015 rate hike, but at the same time is still worried about the soft data trend seen in the US figures.

Next week brings retail sales and PPI figures, with a sprinkling of industrial production, a pinch of capacity utilization rate and the smidgen of Empire State and Philly Fed manufacturing indices. On top of this comes more unemployment claims data, housing starts and the NAHB housing market index. Finally Friday is a biggie, with US inflation figures, another area of note for the Federal Reserve, alongside preliminary UoM consumer sentiment data.

Europe
Over in the Eurozone, excellent services PMI and the best region-wide composite PMI in 11 months saw a strong start to the shortened week; however, a mid-week meeting between Greek and Russian premiers Tsipras and Putin led to market jitters and a negative trading environment on Wednesday. These fears increased on Thursday morning, with doubts over Greece’s ability, and willingness, to repay its latest IMF loan instalment. However, the successful payment of this figure boosted the Eurozone indices, something that continued into Friday.

However there could be more Greek trouble on the horizon. The Eurozone’s deputy finance ministers have given Greece until next Friday to provide a new list of reforms, something that remains the key sticking point between Athens and its creditors. If Greece wants to stand any chance of unlocking more funds in the Eurogroup meeting on the 24th April then these reforms need to be approved, worries over which are likely to cause market uncertainty throughout the week.

Elsewhere, region-wide industrial production data, the Eurozone’s trade balance figure, an ECB press conference, and inflation information should add to what could be a tense week for the Eurozone.

Commodities
It was a choppy week for Brent Crude, as investors processed the news of progress in the Iran nuclear deal, something that could lead to an oil influx, alongside that Shell/BG deal and another extraordinarily high US crude oil inventories figure. This meant Brent Crude fell from highs of $59.27 per barrel on Tuesday to $55.49 per barrel on Wednesday and then back up to $56.38 by Friday.

The dollar’s overall strength this week saw gold fall from $1214 per ounce on Monday to $1194 on Friday. Copper, on the other hand, was fairly stable around $2.75 per pound. Chinese inflation data beat expectations and allowed copper’s minor gains to continue; next week sees the more relevant Chinese GDP and industrial production figures, so copper could be in store for some big moves.

Stock of the week: BG/Royal Dutch Shell
It is hard to separate these stocks this week; the news that Shell is to buy BG for £47 billion saw, unsurprisingly, BG’s share price rocket, whilst perhaps more surprisingly Shell’s began to fall. The extra risk Shell is taking on, and the job cuts this move will cause, disappointed Shell’s investors more than they were pleased, leading to divergent performances for these now entwined companies.

(Source: IT-Finance.com 10/04/2015)

Economic Diary, 13^th to 17^th April 2015

 

Monday 13^th April

Tentative – CNY Trade Balance

12.50am – JPY Core Machinery Orders m/m

12.50am – JPY Monetary Policy Meeting Minutes

 

Tuesday 14^th April

9.30am – GBP CPI y/y

9.30am – GBP PPI Input m/m

9.30am – GBP RPI y/y

10.00am – EUR Industrial Production m/m

1.30pm – USD Core Retail Sales m/m

1.30pm – USD PPI m/m

1.30pm – USD Retail Sales m/m

3.00pm – USD Business Inventories m/m

 

Wednesday 15^th April

3.00am – CNY GDP q/y

3.00am – CNY Industrial Production y/y

3.00am – CNY Fixed Asset Investment ytd/y

7.00am – EUR German Final CPI m/m

10.00am – EUR Trade Balance

12.45pm – EUR Minimum Bid Rate

1.30pm – EUR ECB Press Conference

1.30pm – USD Empire State Manufacturing Index

2.15pm – USD Capacity Utilization Rate

2.15pm – USD Industrial Production m/m

3.00pm – USD NAHB Housing Market Index

3.30pm – USD Crude Oil Inventories

 

Thursday 16^th April

All Day – G20 Meetings Day 1

12.30am – FOMC Member Lacker Speaks

1.30pm – USD Building Permits

1.30pm – USD Unemployment Claims

1.30pm – USD Housing Starts

3.00pm – USD Philly Fed Manufacturing Index

8.00pm – USD FOMC Member Fischer Speaks

 

Friday 17^th April

All Day – G20 Meetings Day 2

6.00am – JPY Consumer Confidence

9.00am – EUR Retail Sales y/y

9.30am – GBP Average Earnings Index 3m/y

9.30am – GBP Claimant Count Change

9.30am – GBP Unemployment Rate

10.00am – EUR Final CPI y/y

1.30pm – USD CPI m/m

1.30pm – USD Core CPI m/m

3.00pm – USD Prelim UoM Consumer Sentiment

3.00pm – USD Prelim UoM Inflation Expectations

 

Earnings releases, 13^th to 17^th April 2015

 

Monday 13^th April

LVMH Moet Hennessy Louis Vuitton SE – Q1 2015 Earnings Release

 

Tuesday 14^th April

Ashmore Group PLC – Q3 2015 Earnings Release

Poundland Grouo PLC – Q1 2015 Trading Statement Release

JPMorgan Chase & Co – Q1 2015 Earnings Release

Wells Fargo & Co – Q1 2015 Earnings Release

Intel Corp – Q1 2015 Earnings Release

SanDisk Corp – Q1 2015 Earnings Release

 

Wednesday 15^th April

Burberry Group PLC – Full Year 2014/15 Trading Update

Hunting PLC – Half Year 2015 Trading Statement Release

Bank of American Corp – Q1 2015 Earnings Release

Delta Air Lines Inc – Q1 2015 Earnings Release

Netflix Inc – Q1 2015 Earnings Release

 

Thursday 16^th April

Debenhams PLC – Interim 2014/15 Earnings Statement

WH Smith PLC – Half year 2015 Earnings Release

American Express Co – Q1 2015 Earnings Release

Citigroup Inc – Q1 2015 Earnings Release

Goldman Sachs Group Inc – Q1 2015 Earnings Release

 

Friday 17^th April

Travelzoo Inc – Q1 2015 Earnings Release

General Electric Co – Q1 2015 Earnings Release