19.04.13 Friday Morning

Global markets started the week on a negative note after Chinese GDP figures showed the Chinese economy grew at a much slower rate than analysts initially anticipated. Chinese GDP for the quarter came in 0.3% below the initial 8% expected, resulting in a sharp decline in commodity prices. Gold took the brunt of the bad news and slipped below $1400 an ounce for the first time since March 2011. The poor data followed a batch of weaker US data as investors feared the global recovery could be derailed.

Citigroup was the first of the US banks to report first quarter results, beating Wall Street estimates. This was quickly overshadowed by the Empire State Manufacturing data from the US coming in lower at 3.1 versus 7.2 expected.

European stock markets pared some of Monday’s losses but remained weak by the end of the day. The International Monetary Fund cut economic forecasts around the globe, lowering the estimate for global economic growth by 0.2 percentage points to 3.3%. US stocks had a better attempt to the upside after strong housing data and better than expected earnings from Goldman Sachs helped sentiment. A recovery in Gold also helped commodity stocks on Tuesday after the precious metal found support, spurring interest to own gold at a cheaper level.

Wednesday saw further negativity after rumours of a German downgrade knocked European stocks lower in morning trade. However, sentiment in the US remained positive after solid home data and earnings from Goldman Sachs and Coca-Cola spurred on investors’ appetite for risk.

European markets picked up Thursday and the Euro and commodity prices stabilised following a few sessions of declines. The gains came as investors put aside the bad news and searched for cheap stocks.

However, corporate earnings from the night before were poor with Bank of America and Intel reporting worse than expected Q1 earnings. More negativity came in the afternoon with US unemployment claims coming in higher and worse than expected Philly Fed Manufacturing Index. Despite the destructive data, markets remained fairly buoyant until the US open which eventually saw the bears take action causing the FTSE to close lower for the fourth consecutive day.  Traders are now gearing up for the start of the G20 meeting for further clues over how policymakers view the global economy.

Global markets picked up Friday recovering some of the sharp losses made earlier in the week. Investors continue to watch developments from the second day of the G20 meeting. Investors also awaited earnings from General Electric, McDonalds and Honeywell. However, despite the positivity, actively has been subdued with volumes on the FTSE100 at just 40% of the 90-day average.

After International Monetary Fund cut global growth forecasts, investors will monitor closely any developments at the IMF meeting over the weekend. With investors enduring a
disappointing run of earnings so far, investors will turn their focus on the likes of Credit Suisse, Apple, Boeing, AstraZeneca, Amazon and Barclays who report their first quarter earnings next week.

Stock of the week – Apple

Shares in Apple fell below $400 for the first time since December 2011 amid concerns over slowing sales. The concerns were triggered after one of its suppliers, Cirrus Logic, where Apple products account for nearly 90% revenue, reported a decline in sales and issued a profit warning. Apple is due to report their latest quarterly results next week, some fear the results may be underwhelming.

Next Week’s Notable Economic Events:

Monday –

• USD - Existing Home Sales

Tuesday –

 
• CNY – HSBC Flash Manufacturing PMI
• EUR – Flash Manufacturing PMI
• USD – Flash Manufacturing PMI
• USD – New Home Sales

Wednesday –

 
• AUD – CPI
• EUR – German Ifo Business Climate
• GBP – BBA Mortgage Approvals
• USD – Core Durable Goods Orders

Thursday –

• GBP – Prelim GDP
• USD – Unemployment Claims
• NZD – Trade Balance

 
Friday –

• JPY – Monetary Policy Statement & Press conference
• USD – Advance GDP
• USD – Revised Consumer Sentiment

 
Next Week’s Notable Earnings:

Monday –

• Reckitt Benckiser Group Interim Management
Statement

Tuesday –

 
• ARM Holdings Earnings
• Premier Foods Interim Management Statement
• Petropavlovsk Interim Management Statement

Wednesday –

• Barclays Interim Management Statement
• GlaxoSmithKline Earnings

Thursday –

 
• Admiral Group Interim Management Statement
• Taylor Wimpey Interim Management Statement