22.05.15 Friday Morning

Eurozone
After big gains at the start of the week, inspired by ECB member Benoit Coeure’s remarks that the central bank was to accelerate its QE programme in May and June in order to pre-empt any summer slump, the Eurozone fell flat from Wednesday onwards. Declining ZEW economic sentiments, and mixed flash manufacturing and services PMIs for the entire region failed to help the Eurozone break out of its sluggish performance; neither did the situation in Greece.

Despite talks in Riga between Tsipras, Merkel and Hollande, and the country’s constant warnings that it won’t be able to make its June 5th IMF repayment, there has been painfully little progress on the matter. In fact, Wolfgang Schauble said there was ‘no substance’ to reports that a deal was any nearer, labelling any optimism coming out of Greece as misguided.

Of course as the start of June approaches, the Greek situation will remain the dominant force surrounding the Eurozone as we look beyond the long weekend. Elsewhere, Gfk German consumer climate figures, M3 money supply data and the latest Spanish inflation numbers are all the region has to distraction itself from the ongoing ‘Grexit’ drama next week.

UK
Until Friday morning, when the FTSE finally began to show signs of life, the UK index has been the epitome of flatness for most of the week. Yet this flatness has left the FTSE around and above the 7000 level, and given how volatile analysts were expecting the post-election landscape to be, such market meekness should perhaps be enjoyed.

The headline number for the UK this week was the first negative inflation figure for 50 years; however, even this had minimal impact on the markets due to the lack of surprise at this CPI slip. The other big UK figure this week, retail sales, was a bit more robust, surging to 1.2% against the 0.4% expected, helping the pound take back the losses it had incurred at the start of the week against the dollar.

Like its European cousins, next week is looking pretty quiet for the FTSE. A day off on Monday gives way to a second GDP estimate on Friday; the only figure of note, but a big one at that.

US
The US markets have been a bit busier than those in Europe, with the Dow Jones and S&P hitting fresh record highs at the start of the week. Since then, sadly, the US markets have been slightly reminiscent of their European peers, drifting away from its highs, even with the Fed effectively ruling out a rate hike in June, as it bore the brunt of wave after wave of weak data.

Whilst building permits and housing starts came in better than expected, unemployment claims increased to 274,000 for the week with existing homes sales also falling alongside declines in the Philly Fed manufacturing index and flash manufacturing PMI alike. Despite the extra fuel this gives the Fed for delaying a rate hike, the US markets failed to take their usual solace in this face, leaving them rather dull as the week wrapped up.

The US is the busiest region next week despite the Memorial Day holiday on Monday, with CB consumer confidence, new and pending home sales and the latest jobless claims data all leading up to the main event on Friday, the USA’s preliminary GDP figure. The country saw a shocking slide to 0.2% from around 2% when the first estimate was announced, so investors will be looking for an upward revision of this dismal figure.

Commodities
In keeping with the tone of the rest of the markets, the commodities were fairly quiet all week. Brent Crude bounced between $64.50 and $66.50 for much of the week, with another negative US crude oil inventories figure preventing the commodity from taking a significant tumble. It was a different story for copper, which hit a 3 week low on Tuesday before seeing a minor bounce back on hopes of more Chinese stimulus. Gold saw the biggest movements all week, unsurprising given its links with the US dollar, falling by nearly $20 to $1205 per ounce on Tuesday as the greenback gained ground before pushing back to $1213 as cable soared following the retail sales figures.

Stock of the week: Barclays PLC
Barclays is the stock of the week, but representative of the cabal of banks, also including RBS, UBS, JPMorgan and Citigroup, that accumulatively were charged $5.7 billion for the forex rigging scandal. Barclays was hit the worst as it was charged a total of $2.4 billion, as figure that contains record fines from both US and UK authorities. Yet following this news Barclays stock soared by over 3% to its highest price in over a year. Investors were clearly happy that some kind of line, however insubstantial, had been drawn under the issue, and given that Barclays holds around £2.5 billion in provisions, i.e. roughly $3.9 billion, the bank escaped relatively, and for many frustratingly, unscathed.

(Source: IT-Finance.com 22/05/2015)

Economic Diary, 25^th to 29^th May 2015

Monday 25^th May

All Day – CHF Bank Holiday

All Day – EUR French Bank Holiday

All Day – EUR German Bank Holiday

All Day – GBP Bank Holiday

All Day – USD Bank Holiday

4.00pm – USD FOMC Member Fischer Speaks

 

Tuesday 26^th May

11.00am – GBP CBI Realized Sales

1.30pm – USD Core Durable Goods Orders m/m

1.30pm – USD Durable Goods Orders m/m

2.45pm – USD Flash Services PMI

3.00pm – USD CB Consumer Confidence

3.00pm – USD New Home Sales

 

Wednesday 27^th May

1.10am – FOMC Member Lacker Speaks

7.00am – EUR Gfk German Consumer Climate

11.00am – EUR Financial Stability Report

 

Thursday 28^th May

12.50am – JPY Retail Sales y/y

7.20am – USD FOMC Member Williams Speaks

1.30pm – USD Unemployment Claims

3.00pm – USD Pending Home Sales m/m

4.00pm – USD Crude Oil Inventories

 

Friday 29^th May

12.30am – JPY Toyko Core CPI y/y

12.50am – JPY Prelim Industrial Production m/m

8.00am – EUR Spanish Flash CPI y/y

9.00am – EUR M3 Money Supply y/y

9.00am – EUR Private Loans y/y

9.30am – GBP Second Estimate GDP q/q

9.30am – GBP Prelim Business Investment q/q

1.30pm – USD Prelim GDP q/q

2.45pm – USD Chicago PMI

3.00pm – USD Revised UoM Consumer Sentiment

 

Earnings releases, 25^th to 29^th May 2015

 

Monday 25^th May

N/A

Tuesday 26^th May

TiVo Inc – Q1 2015 Earnings Release

Micro Focus International PLC – Pre-Close Update

 

Wednesday 27^th May

Tiffany & Co – Q1 2015 Earnings Release

Costco Wholesale Corp – Q3 2015 Earnings Release

Card Factory PLC – Q1 2015 Earnings Release

 

Thursday 28^th May

Abercrombie & Fitch Co – Q1 2015 Earnings Release

Gamestop Corp – Q1 2015 Earnings Release

IG Group Holdings PLC – Pre-Close Trading Statement

Tate & Lyle PLC – Full Year 2014/15 Earnings Release

 

Friday 29^th May

N/A