Another record US session yesterday as well as more rate cuts in Asia, this time by the Bank of Korea, looks set to see European markets once again open higher this morning in a record busting week led by Germany’s DAX after yesterday’s better than expected industrial production data for March seemed to indicate that markets fears about a German slowdown in Q1 may have been overstated, though they do raise the question as to why some of the recent PMI data and IFO data have been so weak.
Be that as it may while good news maybe thin on the ground investor appetite for equities remains strong, despite the fact that good news is likely to be pretty thin on the ground today from an economic data point of view.
This is because Germany aside the economic data out this week from all over Europe has been nothing short of awful and today’s is unlikely to be any better with the publication of the latest unemployment numbers from Greece and Portugal.
While there are no estimates as to what the numbers could be, there is unlikely to be much improvement on the previous number of 27.2% for Greece and 16.9% for Portugal.
In Spain the latest March industrial output numbers are expected to show a fall of 5.3%, a slight improvement on the previous month’s -6.5%, but still pointing to continued economic decline.
The UK is also going to be under the microscope today, though if markets are expecting to see the Bank of England jump on the bandwagon of central banks loosening monetary policy
over the past week they are likely to end up disappointed.
While there is an expectation that the outgoing governor Mervyn King will keep up his push for additional QE, along with Miles and Fisher it is highly unlikely he will succeed, given other committee members concerns about inflation, and as such we can expect no change to the current policy settings.
If anything given recent positive data it seems more likely that we could see Paul Fisher reverse his call for extra QE, however we will only find that out when the minutes get published in two weeks’ time.
Before that though the latest manufacturing and industrial production data for March are expected to show a bit of a slow down after February’s strong rebound. Expectations are for a month on month rise of 0.3% on both measures, still positive but well down from the near 1% rises seen in February.
In the US the latest jobless claims are expected to show a minor increase from last week’s 324k to 335k.
Morrisons keep the update thread to the retail sector today as they follow on from Sainsbury’s posting a 6.2% rise in annual profits yesterday. Investors are braced for more disappointing news as it is expected they will report a 2% drop in like-for-like sales and thus a widening of the gap between them and the top three of the biggest supermarkets in the UK. A major factor in their very poor Christmas trading was put down to the lack of online shopping and home delivery services available and it seems that rumours on the trading floors think that this may be rectified with a tie up between them and Ocado who were trading up over 10% yesterday in anticipation.
The mining sector will have a close eye on the trading activities from ENRC especially with the ongoing Serious Fraud Investigation examining more than $100m of payments to offshore accounts and claims of corruption in their mining operations in Kazakhstan and Africa. This is especially poignant due to ex Board Director, Ken Olisa, having made comments regarding the lack of general regulation in the UK for the miner’s corporate governance failings.
Investors in Supergroup will be enthused by city analysts from Cantor Fitzgerald reiterating their BUY stance on the stock before today’s trading announcement. News in April that they had agreed a long-term deal regarding their retail and e-commerce distribution activities already impressed investors after the debacle they had last year with unstocked shelves following IT errors.
Credit reporting and consumer data group Experian will be releasing their annual results for the year today with city analysts expecting a modest increase in earnings and high single digit growth having already reported a 7% growth in revenue for the first three quarters.
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