Stock markets around the world traded higher on Wednesday boosted by a series generally better than expected service PMI reports. Continental indices outperformed their UK and US counterparts which were held back a bit on interest rate speculation.
US markets were mixed and the Dow ended up nearly flat on the day on conflicting speculation on whether the Fed may raise interest rates in September. Dovish comments from Fed governor Powell offset previous hawkish comments from Atlanta Fed President Lockhart. Meanwhile, weak ADP payrolls were offset by a very strong non-manufacturing PMI report that also included strong new orders and employment readings. Friday’s non-farm payrolls report may give another indication of how much pressure is on the Fed to act.
UK markets acted as though traders are speculating interest rate liftoff in the UK could be moved up from next summer with the FTSE lagging and GBP climbing against pretty much everything. Thursday brings a number of major economic indicators plus a Bank of England meeting, GDP estimate and most importantly, the inflation report which BoE governors have used to discuss monetary policy
trends in the past.
It was a mixed day for CAD which rallied on the back of a better than expected Canadian trade balance then weakened as crude oil retreated following the weekly DOE inventory report. Although inventories fell more than expected again, implied demand weakened.
AUD and NZD have been a bit soft overnight but could be quite active today around today’s Australian employment figures. Another moderate gain in jobs is widely expected which could keep the RBA on its neutral course. JPY and the Nikkei
may also be active today as traders position ahead of tomorrow's Bank of Japan meeting.
Tesla Motors ($0.48) vs street ($0.60) sales $1.20B vs street $1.18
Prudential Financial $2.91 vs street $2.47
Significant announcements released overnight include:
US ADP payrolls 185K vs street 215K
US ADP revision cut to 229K from 237K
US trade balance ($43.8B) vs street ($43.0B)
Canada trade balance ($0.5B) vs street ($2.9B)
US crude oil inventories (4.4 mmbbls) vs street (1.6 mmbbls)
US crude oil implied demand 17275 vs previous 17558
UK BRC shop prices (1.4%) vs previous (1.3%)
Spain house transactions 17.0% vs previous 6.0%
Italy industrial production (0.3%) vs street 1.4%
Eurozone retail sales 1.2% vs street 2.0%
Service / Non-Manufacturing PMI reports
US Markit 55.7 vs previous 55.2
US ISM PMI 60.3 vs street 56.2
US ISM new orders 63.8 vs previous 58.3
US ISM employment 59.6 vs previous 52.7
UK 57.4 vs street 58.0
Sweden 56.6 vs previous 54.9
Spain 59.7 vs street 55.8
Italy 52.0 vs street 53.0
France 52.0 as expected
Germany 53.8 vs street 53.7
Eurozone 54.0 vs street 53.8
Upcoming significant announcements include:
11:30 am AEST Australia employment change street 10K vs previous 7K
11:30 am AEST Australia full-time jobs previous 25K
11:30 am AEST Australia part-time jobs previous (17K)
11:30 am AEST Australia unemployment rate street 6.1%
3:00 pm AEST Japan leading index street 106.9
7:00 am BST Germany factory orders street 5.2%
10:00 am BST Greece unemployment rate street 25.5%
8:00 am BST UK Halifax house prices street 8.3%
9:30 am BST UK industrial production street 2.2%
9:30 am BST UK manufacturing production street 0.4%
12:00 pm BST UK interest rate and QE 0.50% and £375B no change
12:00 pm BST UK Bank of England inflation report
3:00 pm BST UK NIESR GDP estimate previous 0.7%
8:30 am EDT US jobless claims street 272K
10:30 am EDT US natural gas street 42 BCF
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