29.05.15 Friday Morning

Eurozone
A data quiet, and abbreviated, week has led to Greece once again dominating discussions around the Eurozone. The region has showed signs of its trademark volatility since Tuesday, where a 1.6% plunge was countered by just over a percent in gains on Wednesday. Thursday and Friday merely brought with them more declines, with the finger of blame pointed firmly in one direction.

Alternating between hope and despair, there is increasing disparity between what is said by Greece and what is said by its creditors. Greece, for what little it is worth, has spent the week playing up hopes of a deal, setting a target for Sunday, with both Tsipras and Varoufakis stating that progress has been positive. However, a more realistic tone was struck by head Greek negotiator Euclid Tsakalotos, who stating that ‘high level’ political agreement is needed if a deal is to go through.

This was more tonally in keeping with the words of the country’s creditors, Wolfgang Schauble and Christine Lagarde in particular. The German finance minister claimed the constant positivity wafting out of Greece surprised him due to its lack of accuracy, whilst the head of the IMF spoke of the troublesome but, importantly, manageable nature of a Grexit.

Things should really heat up next week, with Greece’s first €306 million repayment to the IMF due on Friday, the initial chunk of a total €1.6 billion to be paid back in the next few weeks. Greece has been adamant it cannot pay even this initial packet without a deal in place; however, the country has been caught crying wolf before, so it is unclear how strong the likelihood of a default is. What is fairly certain is that this issue will plague the Eurozone throughout next week, with the chance of its 3 digit swings increasing. To try and distract itself from this Greek mess, the Eurozone mercifully has a flurry of data to deal with, including manufacturing and services PMIs for much of the region alongside inflation estimates for the Eurozone as a whole.

UK
Like the rest of Europe, there was little for the FTSE to play with this week, especially since its one headline figure, the second estimate of the UK’s Q1 GDP came in at an unchanged 0.3%. And in a post-election Tory (slim) majority world the UK has little of its own volatility; that is, until issues surrounding the UK’s EU referendum heat up.

With the country undergoing the fairly farcical ceremony of a state opening of parliament on Wednesday, the Tories outlined their most pressing issues, including the confirmation of an in/out referendum on Europe. However, without any non-known entities being announced, this opening passed without much market fanfare, leaving the FTSE to plod along to the tune of the drums found in the Eurozone and US.

There should be a bit more excitement next week. The Greek issue is sure to have some kind of effect on the general market atmosphere, and therefore the FTSE, whilst it has more than one piece of honest-to-god data to deal with. UK manufacturing PMI could prove to be problematic on Monday after a slip in April, whilst construction PMI is much the same (and released on Tuesday); on the other hand, services PMI has been the bright spot for the past 2 months, a trend the FTSE will hope continues on Wednesday.

US
Compared to their European cousins, the US markets had a veritable wealth of data to deal with this week, not that it did them much good. With Yellen, and other Fed members, suggesting that a rate hike will happen later this year, the dollar has remained strong. The currency was aided by decent consumer confidence figures alongside better than expected durable goods orders; the one dark spot was a higher than expected jobless claims figure, but this couldn’t interrupt the losses the Dow suffered for most of the week. Fears over US GDP on Friday made matters worse, with some analysts expecting the figure to be revised to a negative number this afternoon.

If the US markets have suffered under dollar dominance this week then things could be even worse at the start of June. Personal spending, ISM non- and normal manufacturing PMIs, factory orders and unemployment claims are all foreplay before the main event next Friday: non-farm employment change and the unemployment rate. The last two months have been problematic for non-farm; April was only 223k and March was revised down to a truly dismal 85k. Figures like this could boost the US markets if the greenback takes a tumble; however if it comes in as bad as March’s number than it could carry the risk of dragging down the Dow alongside the dollar.

Commodities
It was a disappointing week for Brent Crude, which slipped to its worst price since mid-April (around $61 per barrel) on Thursday; things were improved slightly by another negative US crude oil inventory, but it is still a fair few dollars away from the near $70 highs since in the middle of the month.
Copper also took a tumble this week, continuing to fall further away from the $2.92 per pound price it had held throughout the first half of May, despite the increasing chances of stimulus in China. Gold didn’t fare much better, as the sustained strength of the dollar left the precious metal firmly below $1200 per ounce for most of the week.

Stock of the week: Tiffany & Co
Tiffany & Co had suffered earlier in the year as it fell by around 17% in the middle of January following disastrous holiday sales; however, things seem to be improving and a near 10.5% jump on Wednesday after it released its better than expected, if not exactly sparkling, first quarter results puts it at its highest price since its post-holiday season stumble. The jewellery company will now be aiming to get back up to the $100 dollar mark it hasn’t seen since January.

(Source: IT-Finance.com 29/05/2015)

Economic Diary, 1^st to 5^th June 2015

 

Monday 1^st June

2.00am – CNY Manufacturing PMI

2.00am – CNY Non-Manufacturing PMI

2.45am – CNY HSBC Manufacturing PMI

8.15am – EUR Spanish Manufacturing PMI

8.45am – EUR Italian Manufacturing PMI

8.55am – EUR German Final Manufacturing PMI

9.00am – EUR Final Manufacturing PMI

9.30am – GBP Manufacturing PMI

1.30pm – USD Core PCE Price Index m/m

1.30pm – USD Personal Spending m/m

2.45pm – USD Final Manufacturing PMI

3.00pm – USD ISM Manufacturing PMI

 

Tuesday 2^nd June

All Day – EUR Italian Bank Holiday

2.30am – JPY Average Cash Earnings y/y

8.00am – EUR Spanish Unemployment Change

8.55am – EUR German Unemployment Change

9.30am – GBP Construction PMI

9.30am – GBP Net Lending to Individuals m/m

10.00am – EUR CPI Flash Estimate y/y

10.00am – EUR Core CPI Flash Estimate y/y

3.00pm – USD Factory Orders m/m

 

Wednesday 3^rd June

2.45am – CNY HSBC Services PMI

8.15am – EUR Spanish Services PMI

8.45am – EUR Italian Services PMI

8.55am – EUR German Final Services PMI

9.00am – EUR Final Services PMI

9.30am – GBP Services PMI

10.00am – EUR Retail Sales m/m

10.00am – EUR Unemployment Rate

12.45pm – EUR Minimum Bid Rate

1.15pm – USD ADP Non-Farm Employment Change

1.30pm – EUR ECB Press Conference

1.30pm – USD Trade Balance

2.45pm – USD Final Services PMI

3.00pm – USD ISM Non-Manufacturing PMI

3.30pm – USD Crude Oil Inventories

 

 

Thursday 4^th June

12.00pm – GBP Official Bank Rate

1.30pm – USD Unemployment Claims

1.30pm – USD Revised Non-Farm Productivity q/q

5.00pm – USD FOMC Member Tarullo Speaks

 

Friday 5^th June

7.00am – EUR German Factory Orders m/m

1.30pm – USD Non-Farm Employment Change

1.30pm – USD Unemployment Rate

1.30pm – USD Average Hourly Earnings m/m

5.30pm – USD FOMC Member Dudley Speaks

 

Earnings releases, 1^st to 5^th June 2015

 

Monday 1^st June

PVH Corp – Q1 2015 Earnings Release

 

Tuesday 2^nd June

Amec Foster Wheeler PLC – Trading Statement Release

AO World PLC – Full Year 2014 Earnings Release

LondonMetric Property PLC – Full Year 2014 Earnings Release

Synergy Health PLC – Full Year 2015 Earnings Release

Dollar General Corp – Q1 2015 Earnings Release

 

Wednesday 3^rd June

WH Smith PLC – Trading Statement Release

Brown-Forman Corp – Q4 2015 Earnings Release

Five Below Inc – Q1 2015 Earnings Release

 

Thursday 4^th June

N/A

 

Friday 5^th June

Halfords Group PLC – Full Year 2014/15 Earnings Release

Fuller, Smith & Turner PLC – Full Year 2014/15 Earnings Release