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Pre market Briefing, including 'US private sector employment rose in January'
UK Market Snapshot
UK markets finished higher yesterday, led by gains in financial sector stocks, amid upbeat manufacturing data from the US, China and Europe. Schroders, the top gainer in the FTSE100, jumped 8.7%. ICAP climbed 7.7%, after the company announced job reductions and cut its full-year forecast toward the upper end of analyst forecasts. Banks, Barclays, Lloyds Banking Group and Royal Bank of Scotland rallied between 4.2% and 5.4%, on hopes of Greece nearing a debt deal. BP gained 2.6%, after a judge ruled that the company does not have to pay any punitive damages awarded against Halliburton Co. from the 2010 Gulf of Mexico oil spill. Johnson Matthey gained 5.3%, after the company stated that its second-half earnings would be “slightly ahead” of the first six months. The FTSE 100 advanced 1.9% to close at 5,790.7, while the FTSE 250 rose 2.3% to settle at 11,021.0.
US Market Snapshot
US markets closed higher yesterday, amid robust domestic economic report and upbeat manufacturing data from China and Europe that eased concerns about Europe's debt crisis. Banks, Morgan Stanley, Bank of America and Goldman Sachs gained between 1.8% and 4.0%, amid reports that Facebook Inc has hired the banks to manage its IPO. Marathon Petroleum jumped 9.6%, after the company announced that it would buy back $2 billion in shares. Technology stocks, Hewlett-Packard and Microsoft Corp advanced 2.8% and 1.2%, respectively, after data indicated that Philadelphia Semiconductor Index rose 2.4%. Broadcom rallied 8.1%, after the company forecast sales that exceeded analysts’ estimates. The DJIA rose 0.7% to settle at 12,716.5, while the NASDAQ advanced 1.2% to close at 2,848.3. The S&P 500 gained 0.9% to settle at 1,324.1.
Europe Market Snapshot
Other European markets finished higher yesterday, amid better-than-expected manufacturing data from China, Europe and the US and on reports that Greece was close to a debt deal with its creditors. Banks, Credit Agricole, Deutsche Bank and Commerzbank jumped between 4.2% and 7.4%. Infineon Technologies gained 5.6%, after the company reported first-quarter sales that beat analysts’ estimates. Fortum rallied 6.8%, after the company’s fourth-quarter net income surpassed market estimates. Renault gained 4.9%, after Renault-Nissan global sales rose 10% to a record in 2011. Peers, Daimler and Volkswagen rallied 3.8% and 2.4%, respectively. RWE gained 4.9%, after an analyst added the stock to its “Best Ideas” list. The FTSEurofirst 300 index gained 1.9% to close at 1,057.1. Among other European markets, the German DAX Xetra 30 rose 2.4% to close at 6,616.6, while the French CAC-40 advanced 2.1% to settle at 3,367.5.
Asia Market Snapshot
Markets in Asia are trading higher this morning, tracking the overnight gains in the European and the US markets after better-than-expected manufacturing data from the US and Europe signalled that the global economy is recovering. In Japan, Nomura Holdings is trading 7.1% higher, after the company reported an unexpected quarterly profit on asset sales. Mitsubishi UFJ Financial is trading 3.3% higher, after the company reported a 48.0% increase in its nine-month net profit. In Hong Kong, Esprit Holdings is trading 1.9% higher, amid news that the company would shut all its North American stores and seek to license out its brand for that market. In South Korea, Samsung Heavy Industries is trading 1.4% higher, after the company signed an agreement to build an offshore wind turbine plant in Fife, Scotland. The Nikkei 225 index is trading 0.9% higher at 8,890.3. Hang Seng index is trading 1.5% up at 20,629.7, while the Kospi index is trading 1.3% higher at 1,984.0.
Commodity, Currency and Fixed Income Snapshots
Crude Oil
At 0435GMT today, Brent Crude Oil one month futures contract rose 0.28% or $0.31, to trade at $111.87 per barrel. Yesterday, the contract gained 0.52% or $0.58, to settle at $111.56 per barrel, as China’s manufacturing index unexpectedly rose, boosting optimism that the world’s second biggest crude consumer is withstanding Europe’s debt crisis.
Gold
At 0435GMT today, gold futures contract marginally gained 0.05% or $0.90, to trade at $1,750.40 per ounce. Yesterday, the contract rose 0.52% or $9.10, to close at $1,749.50 per ounce, as the dollar weakened against other major currencies, increasing the appeal of the precious metal. Additionally, the Mortgage Bankers Association reported that, for the week ended 27 January 2012, mortgage application volume in the US declined 2.9% from one week earlier.
Currency
At 0435GMT today, the EUR strengthened against the USD, gaining 0.12%, to trade at $1.3185. Yesterday, the EUR rose 0.71% versus the USD, to close at $1.3169, as the manufacturing PMI in Euro-zone rose to a reading of 48.8 in January, marking the highest in the past five months and compared to a reading of 46.9 posted in December.
At 0435GMT today, the GBP strengthened against the USD, marginally gaining 0.05%, to trade at $1.5854. Yesterday, the GBP rose against the USD, gaining 0.55%, to close at $1.5846, as the manufacturing Purchasing Managers’ Index (PMI) in the UK rose to 52.1 in January, compared to an upwardly revised reading of 49.7 posted in December.
Fixed Income
In the US, long term treasury prices fell yesterday, pushing the yields on 30-year bond higher, as strong manufacturing data from China, Europe and the US and hopes that Greece would clinch a deal with its creditors, reduced the demand for the safe haven asset. Yesterday, yields on 10-year notes increased 4 basis points to 1.87%, while yields on 2-year increased 1 basis points to 0.23%. Meanwhile, 30-year bond yields increased 7 basis points to 3.01%.
Key Economic News
UK house prices declined in January
Nationwide indicated that, on a month-on-month basis, house prices in the UK fell 0.2% in January, in line with market expectations and following a similar decline recorded in December. On an annual basis, the House Prices Index rose 0.6% in January, compared to a 1.0% growth recorded in December. Market had expected the index to rise to 1.2% YoY in January.
UK manufacturing PMI expanded in January
On a seasonally adjusted basis, the manufacturing Purchasing Managers’ Index (PMI) in the UK rose to a reading of 52.1 in January, marking the highest level in eight months and compared to an upwardly revised reading of 49.7 posted in December.
German manufacturing PMI expanded in January
The manufacturing PMI in Germany rose to a reading of 51.0 in January, marking the six-month high and compared to an initial estimate of 50.9.
French manufacturing PMI dropped in January
On a seasonally adjusted basis, the manufacturing PMI in France dropped to a reading of 48.5 in January, matching with preliminary estimates and compared to a reading of 48.9 posted in December.
Euro-zone manufacturing PMI rose in January
On a seasonally adjusted basis, the manufacturing PMI in Euro-zone rose to a reading of 48.8 in January, marking the highest in the past five months and compared to a reading of 46.9 posted in December.
Euro-zone CPI remained unchanged in January
On an annual basis, the Consumer Price Index (CPI) in the Euro-zone remained unchanged at 2.7% in January, matching market estimates.
Swiss retail sales rose less-than-expected in December
On a year-on-year basis, retail sales in Switzerland rose 0.6% in December, compared to an increase of 1.8% recorded in November. Market had expected retail sales to rise 1.6% YoY in December. On a month-on-month basis, retail sales fell 2.9% in December, compared to a 0.3% rise recorded in the previous month.
Swiss SVME PMI declined unexpectedly in January
The SVME Association of Purchasing and Materials Management and Credit Suisse reported that, on a seasonally adjusted basis, the PMI in Switzerland unexpectedly fell to a reading of 47.3 in January, compared to a revised reading of 49.1 posted in December. Market had expected the index to rise to a reading of 51.2 in January.
US weekly MBA mortgage applications declined
According to Mortgage Bankers Association (MBA), for the week ended 27 January 2012, mortgage application volume in the US, on a seasonally adjusted basis, declined 2.9% from one week earlier. Additionally, the refinancing demand for the week dropped 3.6% from the week before.
US private sector employment rose in January
Automatic Data Processing, Inc. (ADP) reported that private sector employment in the US rose by 170,000 jobs in January, following a revised increase of 292,000 jobs recorded in December. Market had expected employment to increase by about 172,000 jobs in January, compared to the addition of 325,000 jobs originally reported for the previous month.
US ISM Manufacturing Index rose in January
The Institute for Supply Management (ISM) reported that the Manufacturing Index in the US rose to a reading of 54.1 in January, compared to a revised reading of 53.1 posted in December. Market had expected the index to rise to a reading of 54.5 in January, compared to an originally reported reading of 53.9 in the previous month.
US construction spending rose more-than-expected in December
On a seasonally adjusted annual basis, construction spending in the US rose 1.5% to an annual rate of $816.4 billion in December, compared to a downwardly revised 0.4% increase recorded in November. Market had expected construction spending to rise 0.5% in December from a previously projected 1.2% increase recorded in November.
US auto sales rose in January
Autodata Corp reported that, on an annual basis, the total vehicle sale in the US rose at the rate of 14.18 million in January, marking the highest level since May 2008 and compared to a rate of 13.56 million posted in December.
Japanese monetary base rose in January
On an annual basis, the monetary base in Japan rose 15.0% in January, following a 13.5% growth recorded in December.
