UK Market Snapshot
UK markets finished in positive territory yesterday, helped by gains in consumer goods and basic material shares. Burberry Group advanced 3.6%, following better than anticipated retail sales growth for the third quarter, boosted by a return to growth in the Asian-Pacific markets. Hikma Pharmaceuticals climbed 2.2%, after its US subsidiary, Roxane Laboratories, received approval from the US Food and Drug Administration for its narcolepsy drug. HSBC Holdings edged 1.8% up, after the bank stated that it would have to move 1000 London jobs to its Paris office on account of Brexit. On the losing side, Pearson sank 29.1%, after the company trimmed its profit outlook for 2017 and warned about a dividend cut amid decline in its North American business. The FTSE 100 advanced 0.4%, to close at 7,247.6, while the FTSE 250 rose 0.4%, to settle at 18,312.8.
US Market Snapshot
US markets closed mostly higher yesterday, led by gains in banking sector stocks. JP Morgan Chase, Morgan Stanley and Bank of America climbed 0.5%, 1.7% and 2.6%, respectively. CoLucid Pharmaceuticals rallied 32.5%, after Eli Lilly, up 0.9%, announced that it will acquire the company for about $960.0 million. Apollo Global Management added 0.8%, after media reported that the company is preparing to take Chuck E. Cheese public. On the flipside, Cameco sank 18.2%, after the company projected a net loss for 2016 due to continued weak markets and announced that it would cut 10.0% of its workforce. Mallinckrodt fell 5.9%, following news that the Federal Trade Commission is preparing to file charges against the company for using its monopoly to raise the prices of a drug. The S&P 500 gained 0.2%, to settle at 2,271.9. The DJIA shed 0.1%, to settle at 19,804.7, while the NASDAQ advanced 0.3%, to close at 5,555.7.
Europe Market Snapshot
Other European markets ended mostly higher yesterday, with investors digesting a number of corporate updates. ASML Holding jumped 6.7%, after it reported upbeat results for the fourth quarter and its forecast for the first quarter surpassed market estimates. Gerresheimer climbed 6.3%, following a broker upgrade on the stock to ‘Buy’ from ‘Hold’. Deutsche Bank added 0.9%, after the bank agreed to pay $7.2 billion in a settlement with the US Justice Department over the mortgage misconduct allegations. Sanofi advanced 0.5%, as the company received marketing authorisation for its drug ‘Suliqua’ in Europe by the European Commission. Bucking the trend, Novozymes tumbled 4.7%. The company posted upbeat fourth quarter results but revealed its plan to cut 198 jobs. The FTSEurofirst 300 index gained 0.2%, to close at 1,434.0. Among other European markets, the German DAX Xetra 30 rose 0.5%, to close at 11,599.4, while the French CAC-40 shed 0.1%, to settle at 4,853.4.
Asia Market Snapshot
Markets in Asia are trading mostly higher this morning. In Japan, exporters, Honda Motor and Sharp have gained 2.6% and 6.0%, respectively, amid a weaker Japanese Yen. However, Toshiba has plunged 19.1%, on the back of reports that loss at its US nuclear business could be around $6.1 billion and the company was mulling a spin-off of its semiconductor business. In Hong Kong, Cathay Pacific Airways has tumbled 4.4%, after its strategic review lacked details about its plans to cut jobs and flights to save money. Trinity has declined 1.7%, after news emerged that the company is closing its last factory in Hong Kong. In South Korea, Samsung Electronics and POSCO have risen 0.7% and 3.7%, respectively. The Nikkei 225 index is trading 0.7% higher at 19,029.4. The Hang Seng index is trading 0.6% down at 22,962.0, while the Kospi index is trading marginally higher at 2,070.6.
Key Corporate Announcements Today
AGMs
Cardiff Property
EGMs
Industrial Mlulti Propety Trust
Final Ex-Dividend Date
Baring Emerging Europe, Compass Group, Dewhurst, Shaftesbury, Third Point Offshore Investors Limited, Third Point Offshore Investors Ltd. GBP Shares, UDG Healthcare Public Limited Company
Interim Ex-Dividend Date
Aberdeen Asian Income Fund Ltd., Alcentra Euorpean Floating Rate Income Fund Ltd Red Ord Shs, Amedeo Air Four Plus Limited, Ashtead Group, Bilby, Consort Medical, Coral Products, Doric Nimrod Air One Ltd, Doric Nimrod Air Three Limited Red Ord Pref Shs Npv, Doric Nimrod Air Two Ltd Pref Shs Npv, Ediston Property Investment Company, Empiric Student Property, Fletcher King, London & St lawrence Inv Co., North American Income Trust (The), SSE, Supergroup, Twentyfour Income Fund Limited Ord Red, TwentyFour Select Monthly Income Fund Limited, UK Mortgages Limited
Interim Dividend Payment Date
Crystal Amber Fund Ltd., Electra Private Equity, JPMorgan Global Markets Emerging Income Trust
Quarterly Ex-Dividend Date
Custodian Reit
Trading Announcements
Halfords Group, Revolution Bars Group, British Land, Brown (N), Evraz, Moneysupermarket.com, Pets at Home, Royal Mail, Workspace, Acacia Mining
Key Corporate Announcements for Tomorrow
AGMs
Avacta Group, Character Group, Redefine International
EGMs
PJSC Megafon GDR (Reg S)
Final Dividend Payment Date
Cambria Automobiles, Scottish Oriental Smaller Companies Trust
Interim Dividend Payment Date
BlackRock Commodities Income Inv Trust, Charles Stanley Group, Greene King, Halfords Group, Octopus AIM VCT, Sirius Real Estate Ltd., Solid State, Stobart Group Ltd., United Carpets Group, Vertu Motors
Quarterly Payment Date
Trading Announcements
Close Brothers Group, Record, Bonmarche
Commodity, Currency and Fixed Income Snapshots
Crude Oil
At 0430GMT today, Brent Crude Oil one month futures contract is trading 0.82% or $0.44 higher at $54.36 per barrel, ahead of the Energy Information Administration weekly crude stockpiles data in the US, scheduled to be released later today. Yesterday, the contract declined 2.79% or $1.55, to settle at $53.92 per barrel, amid expectations that US producers would boost their crude output. Meanwhile, the American Petroleum Institute reported that US crude oil inventories dropped by 5.0 million barrels for the week ended 13 January 2017.
Gold
At 0430GMT today, Gold futures contract is trading 0.79% or $9.60 lower at $1202.50 per ounce. Yesterday, the contract slid 0.07% or $0.80, to settle at $1212.10 per ounce, as the US Dollar gained ground against its major peers following the US Federal Reserve Chairwoman, Janet Yellen’s comments regarding interest rate hikes this year.
Currency
At 0430GMT today, the EUR is trading 0.08% higher against the USD at $1.0638, ahead of the European Central Bank’s (ECB) interest rate decision, scheduled for today. Additionally, market participants will monitor the Euro-zone’s current account data for November, slated to release in a few hours. Yesterday, the EUR weakened 0.77% versus the USD, to close at $1.0630.
At 0430GMT today, the GBP is trading 0.13% higher against the USD at $1.2273. Investors will look forward to the US initial jobless claims data for the week ended 13 January 2017, Philadelphia Fed manufacturing survey for January along with housing starts and building permits data for December, set to release later in the day. Yesterday, the GBP fell 1.26% versus the USD, to close at $1.2257. Meanwhile, economic data showed that the US consumer price index rose as expected in December, further strengthening the case for an aggressive rate hikes in 2017.
Fixed Income
In the US, long term treasury prices fell and pushed yields sharply higher, after reports showed that US consumer prices climbed as expected in December, indicating signs of rising inflation. Yesterday, yield on 10-year notes surged 9 basis points to 2.42%, while yield on 2-year notes jumped 6 basis points to 1.23%. Meanwhile, 30-year bond yield soared 7 basis points to 3.00%.
Key Economic News
Number of unemployment benefits claimants in the UK recorded a rise in December
In the UK, number of unemployment benefits claimants recorded an increase of 2.30 K in December, following a gain of 2.40 K in the previous month. Market expectation was for number of unemployment benefits claimants to rise 5.00 K.
UK average earnings excluding bonus rose more than expected in the September-November 2016 period
In the September-November 2016 period, the average earnings excluding bonus in the UK registered a rise of 2.70% on an annual basis, compared to an advance of 2.60% in the August-October 2016 period. Markets were expecting the average earnings excluding bonus to climb 2.60%.
UK ILO unemployment rate remained flat in the September-November 2016 period
The ILO unemployment rate in the UK remained steady at 4.80% in the September-November 2016 period, meeting market expectations.
UK claimant count rate steadied in December
In December, the claimant count rate remained flat at a level of 2.30% in the UK, at par with market expectations.
Employment in the UK registered a drop in the September-November 2016 period
In the UK, employment recorded a drop of 9.00 K in the September-November 2016 period, less than market anticipations of a decline of 35.00 K. Employment had recorded a decline of 6.00 K in the August-October 2016 period.
UK average earnings including bonus rose more than expected in the September-November 2016 period
On an annual basis, the average earnings including bonus registered a rise of 2.80% in the September-November 2016 period, in the UK, compared to a revised rise of 2.60% in the August-October 2016 period. Market anticipation was for the average earnings including bonus to advance 2.60%.
UK house price balance recorded a surprise drop in December
In December, house price balance in the UK fell unexpectedly to a level of 24.00 %, compared to market expectations of a rise to a level of 30.00 %. In the prior month, house price balance had registered a revised level of 29.00 %.
Euro-zone construction output recorded a rise in November
On a MoM basis, the seasonally adjusted construction output advanced 0.40% in November, in the Euro-zone. Construction output had registered a revised similar rise in the previous month.
Euro-zone core CPI advanced as expected in December
In December, the final core consumer price index (CPI) rose 0.90% in the Euro-zone, on a YoY basis, at par with market expectations. The core CPI had registered a rise of 0.80% in the prior month. The preliminary figures had also recorded a rise of 0.90%.
Euro-zone CPI rose as expected in December
The CPI rose 0.50% on a monthly basis in December, in the Euro-zone, at par with market expectations. In the previous month, the CPI had fallen 0.10%.
Euro-zone CPI advanced as expected in December
On a YoY basis, the final CPI rose 1.10% in the Euro-zone, in December, at par with market expectations. The preliminary figures had also recorded a rise of 1.10%. The CPI had advanced 0.60% in the prior month.
German CPI rose as expected in December
The final CPI in Germany climbed 1.70% in December on an annual basis, in line with market expectations. The preliminary figures had also recorded a rise of 1.70%. In the prior month, the CPI had risen 0.80%.
German HICP rose as expected in December
In December, the final harmonised consumer price index (HICP) climbed 1.00% on a MoM basis in Germany, in line with market expectations. The preliminary figures had also recorded a rise of 1.00%. The HICP had recorded a flat reading in the previous month.
German HICP rose as expected in December
In December, on an annual basis, the final HICP rose 1.70% in Germany, compared to a rise of 0.70% in the prior month. The preliminary figures had also indicated a rise of 1.70%. Market anticipation was for the HICP to advance 1.70%.
German CPI advanced as expected in December
On a monthly basis, the final CPI in Germany, rose 0.70% in December, at par with market expectations. The preliminary figures had also recorded an advance of 0.70%. In the prior month, the CPI had recorded a rise of 0.10%.
Fed's Beige Book: US economy continued to expand at modest pace
According to the Federal Reserve’s (Fed) Beige Book report, the US economy continued to expand at a modest pace across most regions through the end of last year and firms expressed optimism about growth in 2017. Most districts indicated that wages increased modestly and prices pressures intensified during the period from late November 2016 through January 9th 2017. Further, manufacturers in most of the Fed’s 12 regions reported increased sales during the period.
Fed’s Yellen: Expect central bank to gradually hike rates over next 3 years
The US Fed Chairwoman, Janet Yellen, in a speech at the Commonwealth Club of California in San Francisco, stated that she and other Fed policymakers expect to lift the key benchmark interest rate "a few times a year" through 2019, putting it near the long-term sustainable rate of 3.0%. She also acknowledged the fact that since the US economy is now close to full employment and that inflation is headed towards the central bank’s 2.0% goal, it makes sense to gradually lift interest rate. However, she also warned that rate hike expectations will change as the economic outlook changes.
US housing market index declined surprisingly in January
The housing market index fell unexpectedly to a level of 67.00 in January, in the US, compared to a revised reading of 69.00 in the prior month. Markets were expecting the housing market index to record a steady reading.
US CPI (ex-food & energy) advanced as expected in December
The CPI (ex-food & energy) in the US registered a rise of 0.20% on a monthly basis in December, in line with market expectations. In the previous month, the CPI (ex-food & energy) had registered a similar rise.
US CPI remained steady in December
The non-seasonally adjusted CPI in the US remained steady on a MoM basis, in December. CPI had fallen 0.20% in the prior month.
US manufacturing production rose less than expected in December
On a MoM basis, manufacturing production in the US rose 0.20% in December, compared to a drop of 0.10% in the prior month. Markets were expecting manufacturing production to advance 0.40%.
US CPI (ex-food & energy) rose as expected in December
The CPI (ex-food & energy) in the US advanced 2.20% on a YoY basis in December, compared to an advance of 2.10% in the prior month. Market expectation was for the CPI (ex-food & energy) to rise 2.20%.
US mortgage applications recorded a rise in the last week
Mortgage applications advanced 0.80% on a weekly basis, in the week ended 13 January 2017, in the US. Mortgage applications had advanced 5.80% in the previous week.
US CPI recorded a rise in December
In the US, the non-seasonally adjusted CPI registered a rise to 241.43 in December, lower than market expectations of a rise to a level of 241.51. The CPI had registered a level of 241.35 in the prior month.
US Total net TIC flows climbed in November
Total net treasury international capital (TIC) flows climbed to $23.70 billion in the US, in November. In the previous month, total net TIC flows had recorded a revised reading of $20.60 billion.
US CPI advanced as expected in December
In the US, the CPI rose 2.10% on a YoY basis in December, at par with market expectations. In the prior month, the CPI had climbed 1.70%.
US core CPI climbed in December
In the US, the seasonally adjusted core CPI climbed to 249.93 in December, higher than market expectations of a rise to a level of 249.75. The core CPI had registered a reading of 249.36 in the previous month.
US CPI rose as expected in December
On a MoM basis in the US, the CPI advanced 0.30% in December, meeting market expectations. The CPI had advanced 0.20% in the prior month.
US Redbook index slid in the last week
On a MoM basis, the seasonally adjusted Redbook index in the US registered a drop of 3.40% in the week ended 13 January 2017. In the prior week, the Redbook index had registered a drop of 3.10%.
US capacity utilisation rose in December
Compared to a revised level of 74.90% in the previous month capacity utilisation in the US rose to a level of 75.50% in December. Markets were anticipating capacity utilisation to climb to a level of 75.40%.
US net TIC long term purchases rose in November
In November, net TIC long term purchases rose to a level of $30.80 billion in the US, compared to a revised reading of $9.30 billion in the previous month.
US industrial production rose more than expected in December
Industrial production advanced 0.80% on a monthly basis in the US, in December, more than market expectations for an advance of 0.60%. In the prior month, industrial production had fallen by a revised 0.70%.
US Redbook index registered a rise in the last week
The Redbook index in the US advanced 0.30% in the week ended 13 January 2017 on a YoY basis. In the previous week, the Redbook index had risen 0.90%.
BoC held interest rate, considered rate cut an option amid concern over Trump policies
The Bank of Canada (BoC) kept benchmark interest rate unchanged at 0.5%. The BoC Governor, Stephen Poloz warned that an interest rate cut remains in play as the country’s economy braces to take a “material” hit from a much more protectionist United States under Donald Trump. Additionally, the central bank released its Monetary Policy Report that sets out its latest forecasts for Canada’s economic growth. The bank predicts Canada’s economy to grow by 2.1% in each of 2017 and 2018 and that it would return to full capacity around mid-2018.
Foreign investors remained net buyers of Japanese bonds in the previous week
Foreign investors were net buyers of ¥517.00 billion worth of Japanese bonds in the week ended 13 January 2017, from being net buyers of a revised ¥624.10 billion worth of Japanese bonds in the previous week.
Foreign investors became net buyers of Japanese stocks in the previous week
Foreign investors remained net buyers of ¥246.50 billion worth of Japanese stocks in the week ended 13 January 2017, from being net buyers of ¥346.80 billion worth of Japanese stocks in the prior week.
Japanese investors became net buyers of foreign bonds in the previous week
Japanese investors remained net buyers of ¥332.10 billion worth of foreign bonds in the week ended 13 January 2017, as compared to being net buyers of a revised ¥207.90 billion worth of foreign bonds in the previous week.
Japanese Tokyo condominium sales recorded a rise in December
In December, on an annual basis, Tokyo condominium sales in Japan climbed 13.20%. Tokyo condominium sales had recorded a drop of 22.70% in the previous month.
Japanese investors became net buyers of foreign stocks in the previous week
Japanese investors remained net buyers of ¥49.80 billion worth of foreign stocks in the week ended 13 January 2017, as compared to being net buyers of ¥234.20 billion worth of foreign stocks in the previous week.