20.03.15 Friday Morning

US
A quiet start and end to the week was overshadowed by a very busy Wednesday, with the US Federal Reserve taking centre stage. Janet Yellen removed the word ‘patient’ from the Fed’s lexicon, whilst also stating that the institution needs to see significant growth in the jobs sector before it will seriously consider an interest rate hike. By throwing positive morsels to both the hawks and the doves, this Fed statement highlighted the complex logic of this interest rate debate.

The US markets surged after the announcement as the dollar sank, with investors seemingly pleased that the hike has been delayed. Yet the week’s latest disappointing run of data, with weak jobless claims, trade balance, Philly Fed, industrial production and housing figures all dampened the Dow either side of Wednesday’s statement, despite logic dictating that anything that would delay a rate hike, as this information would, should be good for the markets. With the dollar regaining all of its losses against the euro and pound by Thursday night, the situation is complicated. The US markets are caught between fearing a stronger dollar, inevitable if a rate hike happens, and mourning the constant stream of disappointing data in key sectors, swinging to and fro between losses and gains as investors struggle to decide which way to turn.

With the latest inflation figures on their way next week, another important factor in this debate, alongside core durable goods orders and final GDP data, the US markets are likely to undergo another rocky week unless investors can more firmly decide what they want to see from a ‘recovering’ US economy.

UK
The US couldn’t draw all of the focus this week, as early gains for the FTSE gave way to record highs by the end of the week following George Osborne’s final Budget before the election. Oil, savings and alcohol sectors were all boosted by the Chancellor; on top of this came an upward revision for UK GDP and a downward revision for inflation both contributing to the positive swell in the UK index.

Yet there were more worrying signs. Whilst employment reached an all-time high, wage growth once again slowed, somewhat undermining the creation of jobs the Conservatives are so keen to celebrate. This wage growth slip pushed the pound to 5 year lows against the dollar, and despite sterling seeing big gains following the Fed statement, by the end of the week it was back on its way towards its cable-nadir. 

Next week brings with it UK inflation, a hot topic with 2 camps still battling over whether the oil-inspired declines are a positive, alongside retail sales and CBI industrial order expectations.

Europe
The DAX hit record highs on Monday as it basked in the lingering QE glow, but slipped into big declines as the week went on. The US and US stole the spotlight away from the recently dominate Eurozone this week, and a lack of data meant the region had little to work with to drag it out of its mid-week slump. An EU economic summit that has so far yielded little in the way of progress between Germany and Greece has been the focus on Thursday and Friday; despite this the Eurozone indices have slowly begun to take back their declines as the week comes to a close.

The Eurozone has the busiest 7 days out of the major markets next week, with flash manufacturing and services PMI across the region, German Ifo business climate data, consumer confidence figures and M3 money supply all ready to either help or hinder the Eurozone’s rally.

Commodities
Brent Crude spent the week hovering between $52 and $56 per barrel, with a post-Budget rebound almost immediately wiped out by the by the news that US oil inventories are at an all-time high. Each week the nightmarish situation for the commodity in regards US crude oil inventories grows, and next week is likely to be no different. 

Gold remains oil’s brother in misery, as the US dollar made a mockery of the precious metal. Following the Fed statement on Wednesday gold was pushed back up to $1170 per barrel, but like the pound and the euro suffered under the greenback’s aggressive comeback on Thursday, leaving the metal to languish below $1200 for a bit longer.

Stock of the week: TSB Banking Group
After giant gains last week, TSB Banking Group managed to hold onto this growth before seeing another surge on Friday as the company confirmed a £1.7 billion takeover by Spain’s Sabadell. This pushed the stock up to £3.33, a far cry from the £2.64 price it was trading at this time last week.

(Source: IT-Finance.com)

Economic Diary, 23^rd to 27^th March 2015

 

Monday 23^rd March

11.00am – GBP CBI Industrial Order Expectations

2.00pm – USD Existing Home Sales

2.00pm – USD FOMC Member Williams Speaks

3.00pm – EUR Consumer Confidence

 

Tuesday 24^th March

1.45am – CNY HSBC Flash Manufacturing PMI

8.00am – EUR French Flash Manufacturing PMI

8.00am – EUR French Flash Services PMI

8.30am – EUR German Flash Manufacturing PMI

8.30am – EUR German Flash Services PMI

9.00am – EUR Flash Manufacturing PMI

9.00am – EUR Flash Services PMI

9.30am – GBP CPI y/y

9.30pm – GBP PPI Input m/m

12.30pm – USD CPI m/m

12.30pm – USD Core CPI m/m

1.45pm – USD Flash Manufacturing PMI

2.00pm – USD New Home Sales

 

Wednesday 25^th March

9.00am – EUR German Ifo Business Climate

9.30am – GBP BBA Mortgage Approvals

9.30am – GBP FPC Statement

11.00am – GBP CBI Realized Sales

12.30pm – USD Core Durable Goods Orders m/m

2.30pm – USD Crude Oil Inventories

 

Thursday 26^th March

7.00am – EUR Gfk German Consumer Climate

9.00am – EUR M3 Money Supply y/y

9.00am – EUR Private Loans y/y

9.30am – GBP Retail Sales m/m

12.30pm – USD Unemployment Claims

11.30pm – JPY Household Spending y/y

11.30pm – JPY Tokyo Core CPI y/y

 

Friday 27^th March

12.30pm – USD Final GDP q/q

2.00pm – USD Revised UoM Consumer Sentiment

 

Earnings releases, 23^rd to 27^th March 2015

 

Monday 23^rd March

SVG Capital PLC – Preliminary 2014 Earnings Release

Pennon Group PLC – Pre-close Trading Statement

 

Tuesday 24^th March

A.G.Barr PLC – Full Year 2014 Earnings Release

Spire Healthcare Group PLC – Full Year 2014 Earnings Release

Faroe Petroleum PLC – Full Year 2014 Earnings Release

 

Wednesday 25^th March

Card Factory PLC – Full Year 2014 Earnings Release

Bellway PLC – Half Year 2014 Earnings Release

Balfour Beatty PLC – Full Year 2014 Earnings Release

 

Thursday 26^th March

Gamestop Corporation – Full Year & Q$ 2014 Earnings Release

Accenture PLC -  Q2 2015 Earnings Release

 

Friday 27^th March

Blackberry Limited – Q4 2014 Earnings Release