European markets finished flat on their backs again today as falling stocks and rising treasury yields indicated growing concern about financial turmoil in the Eurozone with Greece teetering on the edge of default, possibly later this month. Apparently after yesterday’s big payment to the IMF, the country only has about €90M in cash and despite all the talk, there’s still no tangible signs of a lasting deal in sight. The growing risk that a miscalculation on either side could push Greece over the edge may continue to keep European markets volatile for some time to come.
The US started the day following its European counterparts lower but has made back most of the ground it lost early on. Most interestingly, bond prices rose and treasury yields fell in the US today, the opposite of Europe which along with a rebound in gold and a rising CHF suggest we may be starting to see a flight of capital out of Europe toward traditional defensive havens.
US action has sent neutral to positive momentum into today’s Asia Pacific trading. The main focus today is on China where retail sales and industrial production may give an indication of whether recent PBOC rate cuts are working or if more easing may be needed.
These figures could have a significant impact on China sensitive markets like Hong Kong and Australian stocks, AUD, NZD, copper, crude oil and more. Australian markets and crude oil have been trending upward heading into the news suggesting the street is expecting to see some improvement
Later on when focus shifts to Europe again, the spotlight may be firmly on the UK once again. The country’s employment and inflation reports, plus expected comments from Bank of England Governor Carney on when interest rate hikes could start may keep GBP and the FTSE
quite active through the day. Sterling has been climbing indicating that traders expect the central bank to remain hawkish relative to others.
Despite two Fed speakers hinting that rate liftoff could still come this year, USD has remained soft relative to other currencies and commodities. Gold and particularly crude oil have been taking advantage of the USD decline to post strong rebounds. Oil strength has lit a fire under CAD and NOK today. In contrast, SEK has been the weakest performing major after Riskbank minutes left the door open to future interest rate cuts, a prospect that continues to drag on NZD (RBNZ potential cuts).
Tomorrow morning also brings US retail sales with traders looking for an indication of whether consumer spending bounced back in April along with employment, which could impact both USD and US indices.
There have been no major corporate reports after the US close today.
Significant announcements released overnight include:
UK NIESR GDP estimate 0.4% vs street 0.6%
UK same store sales (2.4%) vs street 0.6%
UK industrial production 0.7% vs street 0.3%
UK manufacturing production 1.1% vs street 1.0%
Norway mainland GDP forecast cut to 1.3% from 2.0%
Sweden consumer prices (0.2%) vs street 0.2%
Upcoming significant announcements include:
8:45 am AEST New Zealand food prices previous 0.1%
11:30 am AEST Australia wage price index street 2.4%
3:30 pm AEST China retail sales street 10.4%
3:30 pm AEST China industrial production street 6.0%
4:00 pm AEST Bloomberg China monthly GDP estimate street 6.35%
TBA Singapore GDP street 2.2%
TBA China New yuan loans street 903B
9:30 am BST UK jobless claims street (20K)
9:30 am BST UK rolling 3M jobs change street 225K
9:30 am BST UK average weekly earnings street 1.7%
9:30 am BST UK unemployment rate street 5.5%
10:30 am BST Bank of England Governor Carney speaking on inflation report
6:30 am BST France GDP street 0.7%
7:00 am BST Germany GDP street 1.3%
7:00 am BST Germany consumer prices street 0.4%
7:45 am BST France consumer prices street 0.1%
8:00 am BST Spain consumer prices street (0.6%)
9:00 am BST Italy GDP street (0.2%)
10:00 am BST Eurozone industrial production street 1.9%
10:00 am BST Eurozone GDP street 1.0%
8:30 am EDT US retail sales street 0.2%
8:30 am EDT US retail ex auto street 0.5%
8:30 am EDT US retail ex auto and fuel street 0.6%
10:30 am EDT US DOE crude oil inventories street (0.25 mmbbls)