19.06.15 Friday Morning

Eurozone
This week was always building up to the Eurogroup meeting on Thursday, and the region prepared for it in the usual manner: with aggressive finger pointing from both sides and the complete absence of progress.

By Thursday, then, hopes were pretty low (to say the least) about chances of a deal arising in Luxembourg. Yet the meeting ended not only without a solution, but increased hostility from each side, with IMF head Christine Lagarde urging for a dialogue with ‘adults in the room’. There will now be emergency meetings to discuss both the dire liquidity situation of the Greek banks (to be discussed on Friday by the ECB) and another attempt at a deal (on Monday in a general, and impromptu, EU summit).

Of course, in reaction to the week’s continued uncertainty the markets have jumped about like nobody’s business, with the DAX (emblematic of the rest of the region) hitting fresh 4 month lows on Tuesday before having moving up by around 400 points by Friday morning to 11200, despite the disastrous outcome of the Eurogroup meeting.

No doubt next week will see Greece remain in focus, unless by some miracle a deal is hashed out at the EU summit on Monday; given that Tuesday sees the country with only 7 days to come up with a plan to pay the IMF its €1.6 billion and avoid default (or whatever it will be called), things could get increasingly jittery as next week goes on. Manufacturing and services PMIs on Tuesday are likely to provide only the mildest distraction, with preliminary German inflation data coming on Friday.

UK
Like the majority of the European indices, the FTSE was preoccupied with the Greek issue for most of the week. However, unlike much of June, the UK index did have a few opportunities to break out on its own, especially with strong jobs data that saw better than expected wage growth and the lowest ONS unemployment figure since it started its records in 1999. Yet these triumphs, alongside as expected inflation figures and better than forecast retail sales, failed to interrupt the FTSE’s dependency on the Eurozone. In a roller-coaster of a week the UK index hit 5 month lows at its worst moments at the start of the week only to best those lows on Thursday before posting a complete recovery come Friday.

It’s a return to a rather quiet calendar next week, with only the inflation report hearings and CBI realized sales of any direct statistical interest to the UK. However with the Greek issue hurtling towards its (sort of) conclusion, the FTSE is likely to be preoccupied with that at least until July.

US
Whilst Europe focused on Greece, the US markets had the latest Federal Reserve statement to look forward to. Of course, the Dow Jones et al. still were influenced by the goings on in Greece, but also helped caused a rather remarkable rally on Tuesday that saved the DAX and the FTSE from worsening their fresh 4 and 5 month lows.

Wednesday night was the main event, with Yellen largely saying what was expected. September still looks the most likely date for any initial rate hike, but vaguely dovish comments about needing to see improvement in labour market conditions and the inflation target left investors with plenty to chew over. News of a slightly worse than expected inflation figure on Thursday, and its important ramifications for interest rates, then helped contribute to a bad day for the dollar on Thursday and an impressive 200 point climb for the Dow.

The US markets will have slightly more to play with than their European counterparts next week; existing homes sales, durable goods orders and revised UoM consumer sentiment bookend the week, with the big figure coming on Wednesday. The final GDP the quarter should show confirmation of a contraction, and provide the Fed with another reason to bide its time over any interest rate raise.

Commodities
Brent Crude has spent the week hovering around $64 per barrel, showing a fair amount of resilience around this level. Copper, on the other hand, continued its decline, falling to $2.59 per pound on more weakness from China; that is a far cry from the $2.90 level it maintained throughout the first half of May. Gold has been the biggest commodity winner of the week, even if its gains largely came on one day; the dollar’s losses on Thursday sent investors running to the precious metal, and gold jumped up by nearly $20 to $1201.15 per ounce by the close.

Stock of the week: Colt Group PLC
It snuck in under the wire, but Colt Group is the stock of the week after its explosive gains on Friday. The telecoms company jumped by over 20% at the end of the week following the news that US fund manager Fidelity offered £1.90 per share for the remaining piece of the company it doesn’t already own. This deal, worth £1.7 billion, pushed Colt’s stock up to the aforementioned £1.90, leaving the stock at its highest price since its spikes at the start of December 2011.

(Source: IT-Finance.com 19/06/2015)

Economic Diary, 22^nd to 26^th June 2015

 

Monday 22^nd June

3.00pm – EUR Consumer Confidence

3.00pm – USD Existing Home Sales

 

Tuesday 23^rd June

2.45am – CNY HSBC Flash Manufacturing PMI

8.00am – EUR French Flash Manufacturing PMI

8.00am – EUR French Services PMI

8.30am – EUR German Flash Manufacturing PMI

8.30am – EUR German Services PMI

9.00am – EUR Flash Manufacturing PMI

9.00am – EUR Services PMI

10.00am – GBP Inflation Report Hearings

11.00pm – GBP CBI Industrial Order Expectations

1.30pm – USD Core Durable Goods Orders m/m

1.30pm – USD Durable Goods Orders m/m

2.45pm – USD Flash Manufacturing PMI

3.00pm – USD New Home Sales

 

Wednesday 24^th June

9.00am – EUR German Ifo Business Climate

1.30pm – USD Final GDP q/q

3.30pm – USD Crude Oil Inventories

 

Thursday 25^th June

7.00am – EUR Gfk Consumer Climate

11.00am – GBP CBI Realized Sales

1.30pm – USD Unemployment Claims

1.30pm – USD Core PCE Price Index m/m

1.30pm – USD Personal Spending m/m

1.30pm – USD Personal Income m/m

 

Friday 26^th June

12.30am – JPY Household Spending y/y

12.30am – JPY Toyko Core CPI y/y

9.00am – EUR M3 Money Supply y/y

9.00am – EUR Private Loans y/y

3.00pm – USD Revised UoM Consumer Sentiment

Earnings releases, 22^nd to 26^th June 2015

 

Monday 22^nd June

Stanley Gibbons Group PLC – Trading Statement

 

Tuesday 23^rd June

Carnival PLC – Q2 2015 Earnings Release

Carnival Corp – Q2 2015 Earnings Release
Darden Restaurants Inc – Q4 2015 Earnings Release

Telecom Plus PLC – Full Year 2014 Earnings Release

Petrofac Ltd – Trading Statement Release

 

Wednesday 24^th June

Imaginatik PLC – Preliminary Results

James Latham PLC – Final Accounts Announcement
Stagecoach Group PLC – Full Year 2014 Earnings Release

 

Thursday 25^th June

Nike Inc – Q4 2015 Earnings Release
Debenhams PLC - Trading Update 

 

Friday 26^th June

N/A