Markets Seeking Direction from the ECB Today

June 5, 2014

Investors are marking time ahead of the ECB rate announcement and press conference at 11:45 GMT and 12:30 GMT, respectively.  Rates are expected to be cut slightly, and there probably will be other unconventional moves to promote bank lending.  Yesterday’s Federal Reserve Beige Book report had depicted modest to moderate continuing growth with low inflation.

In the meantime, the Bank of England made no change in its policy setting and released a basis statement that revealed no information beyond the June 18 scheduled release date of minutes from the meeting.

The dollar is unchanged against the loonie and yuan and has slipped by 0.3% versus the kiwi, 0.2% relative to the yen and 0.1% vis-a-vis the euro, Swissie, Aussie dollar and sterling.

Share prices advanced 0.9% in India and 1.1% in China but were otherwise little changed in the Pacific Rim.  In Europe, equities rose 0.7% in Italy, 0.2% in Spain and 0.1% in France but fell so far by 0.3% in London and 0.1% in Frankfurt and Zurich.

The ten-year British gilt and German bund yields softened by two and one basis points.  Japanese JGBs are steady.

WTI oil fell by 0.4% to $102.80 per barrel.  Gold edged up 0.1% to $1,244.40 per ounce.

German industrial orders rebounded 3.1% in April and were 6.3% higher than a year earlier.  Domestic orders for all goods were unchanged, and those for capital goods, a leading indicator of future business investment, dipped 0.4%.  In contrast, foreign demand jumped 5.5%.

The volume of euro area retail sales advanced 0.4% in April, beating expectations, and were 2.4% greater than a year before.  Sales had climbed 2.6% at an annualized rate between 4Q13 and 1Q14.

China’s composite HSBC-compiled purchasing managers index ticked just barely over the 50 neutral threshold to 50.2 in May, breaking a string of three sub-50 readings including 49.5 in April.  But the service-sector Chinese PMI score settled back to 50.7 from 51.4 in April and 51.9 in March.  Business expectations were at an 11-month low.

Hong Kong’s manufacturing PMI dropped to an 11-month low of 49.1 from 49.7 in April and 53.3 in March.  A sputtering Chinese economy hurts Hong Kong.

The Irish service-sector PMI scored a 61.7, down from an 86-month peak of 61.9 in April.  Ireland’s composite PMI was also at a 2-month low, 59.4, after a 94-month peak of 60.8 in April.

The German construction purchasing managers survey was troubling.  For a second straight month, the index arrived below 50, printing at an 14-month low of 48.1 in May.

According to J.P. Morgan, the global composite PMI, which embodies both manufacturing and service-sector activity, hit an 8-month high of 54.3 in May after 52.8 in April.

Euroland’s retail purchasing managers index retreated to a stagnating score of 49.9 in May from 51.2 in April, 49.2 in March, and 48.5 in February.  The German retail PMI fell 0.6 points to 52.5, and Italy’s retail PMI slumped to 45.3 from 49.5.  The French retail PMI ticked up 0.2 points in contrast to 50.5.

Britain’s Halifax house price index advanced sharply in April, rising 3.9%.  Such was 8.7% higher than a year earlier in February-April.  U.K. care sales climbed 7.7% on year in May.

Australia recorded a trade deficit, amounting to A$ 122 million, in April, the first red-ink balance since October.

South Korean GDP grew 0.9% on quarter in 1Q14 and 3.9% on year.  Finnish GDP fell by 0.4% last quarter and was 0.6% lower than in the first quarter of 2013.

French unemployment stayed at 10.1% last quarter.  The Greek jobless rate ticked down 0.1 percentage point to 26.8% in March.

Filipino producer prices were just 0.1% higher in April than a year earlier.  Consumer prices in May, however, were up 4.5% on year.  Taiwanese consumer prices posted a 1.6% 12-month rise.

U.S. jobless insurance claims for last week will be reported today.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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