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Market briefing: US markets closed mostly lower yesterday, as a rally in crude oil prices

Published: 09:02 27 May 2016 BST

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UK Market Snapshot
UK markets ended mixed yesterday. Mining sector stocks, Antofagasta, Anglo American, BHP Billiton and Glencore rose 1.2%, 1.5%, 1.7% and 1.9%, respectively, amid gains in metals prices. Tate & Lyle advanced 1.6%, after it reported an increase in its pre-tax earnings for the year ended 31 March 2016. On the downside, Daily Mail & General Trust tanked 10.8%, after it lowered its operating margin target for its DMG media division. DCC, Whitbread and Carnival dropped 2.5%, 2.6% and 3.2%, respectively, as they went ex-dividend. Banks, HSBC Holdings, Standard Chartered and Royal Bank of Scotland Group fell 0.1%, 1.0% and 2.9%, respectively. United Utilities Group shed 1.0%, following a significant decline in its full year underlying earnings. Energy firms, Royal Dutch Shell and BP dipped 0.2% and 0.4%, respectively, as crude oil prices slid. The FTSE 100 marginally advanced, to close at 6,265.7, while the FTSE 250 fell 0.2%, to settle at 17,192.8.
US Market Snapshot
US markets closed mostly lower yesterday, as a rally in crude oil prices lost momentum and a decline in materials and financial sector stocks offset gains in utilities and telecom firms. Eastman Chemical, LyondellBasell Industries, Dow Chemical and Freeport-McMoRan shed 1.1%, 1.6%, 1.7% and 2.7%, respectively. Abercrombie & Fitch tanked 15.7%, as its first quarter sales fell short of market expectations. On the brighter side, Dollar Tree rallied 12.8%, after it posted upbeat profit for the first quarter and raised its earnings outlook for 2016. HP climbed 6.9%, following buoyant profit for the second quarter. PVH Corp. rose 4.3%, as it boosted its projected earnings for the full year. The S&P 500 marginally fell, to settle at 2,090.1. The DJIA shed 0.1%, to settle at 17,828.3, while the NASDAQ advanced 0.1%, to close at 4,901.8.
Europe Market Snapshot
Other European markets finished higher yesterday, buoyed by an advance in automobile and mining companies. ArcelorMittal climbed 6.9%, amid speculation that the European Commission could extend its anti-dumping probe on imports of Chinese hot-rolled coil to more countries. Volkswagen and Bayerische Motoren Werke added 0.7% and 2.0%, respectively, while Renault and Peugeot rose 2.7% each. On the contrary, Banco Popular Espanol sank 26.5%, after it disclosed plans to raise €2.5 billion through new share sale. Other lenders, Banco Santander, Bankia and Banco de Sabadell fell 1.9%, 2.4% and 5.0%, respectively. The FTSEurofirst 300 index gained 0.2%, to close at 1,369.6. Among other European markets, the German DAX Xetra 30 rose 0.7%, to close at 10,272.7, while the French CAC-40 advanced 0.7%, to settle at 4,512.6.
Asia Market Snapshot
Markets in Asia are trading mostly higher this morning, ahead of the US Fed Chairwoman, Janet Yellen’s speech, due later today. In Japan, data showed that consumer prices dropped in April, raising hopes that the Bank of Japan could further ease its monetary policy in June. Toshiba has soared 10.1%, following a broker upgrade on the share to ‘Overweight’ from ‘Underweight’. Oil explorers, Japan Petroleum Exploration and Inpex have risen 2.8% and 3.7%, respectively. However, Takata has fallen 6.6%, on the back of news that KKR & Co is in talks with the company for a possible acquisition. In Hong Kong, CNOOC and PetroChina have shed 0.5% and 1.5%, respectively. In South Korea, Hyundai Motor and POSCO have added 0.4% and 0.5%, respectively. The Nikkei 225 index is trading 0.4% higher at 16,846.3. The Hang Seng index is trading 0.3% down at 20,334.3, while the Kospi index is trading 0.3% higher at 1,962.3.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.75% or $0.37 lower at $49.22 per barrel. Yesterday, the contract declined 0.30% or $0.15, to settle at $49.59 per barrel, retreating from $50.0 per barrel mark, as fears regarding global oil supply glut resurfaced.
Gold
At 0330GMT today, Gold futures contract is trading 0.07% or $0.80 lower at $1219.60 per ounce. Yesterday, the contract declined 0.28% or $3.40, to settle at $1220.40 per ounce, extending its recent losses, amid prospects of a hike in interest rates by the US Fed.
Currency
At 0330GMT today, the EUR is trading 0.07% lower against the USD at $1.1186. Investors will look forward to the US Federal Reserve Chief, Janet Yellen’s speech, due later today. Also, the second estimate of the US GDP for the first quarter will be closely awaited. Yesterday, the EUR strengthened 0.35% versus the USD, to close at $1.1194. On macro front, the US durable goods orders rose more than anticipated for April.
At 0330GMT today, the GBP is trading a tad lower against the USD at $1.4667. Meanwhile, the UK GfK consumer confidence fell less than expected in May. Yesterday, the GBP weakened 0.18% versus the USD, to close at $1.4670, after the UK GDP rose less than expected on an annual basis in the first quarter.
Fixed Income
In the US, long term treasury prices rose and pushed yields lower, after auction of seven-year notes received strong demand from investors and amid hawkish speeches from two US Federal Reserve officials.  Yesterday, yield on 10-year notes declined 4 basis points to 1.83%, while yield on 2-year notes lost 5 basis points to 0.87%. Meanwhile, 30-year bond yield fell 3 basis points to 2.64%.

Key Economic News
UK Total business investment slid in 1Q 2016
The preliminary total business investment dropped 0.50% on a quarterly basis, in 1Q 2016, in the UK. Total business investment had recorded a drop of 2.00% in the previous quarter.
UK gross fixed capital formation rose less than expected in 1Q 2016
In 1Q 2016, the flash gross fixed capital formation in the UK advanced 0.50% on a QoQ basis, compared to a revised drop of 1.10% in the prior quarter. Market expectation was for gross fixed capital formation to climb 0.90%.
UK consumer confidence recorded an unexpected rise in May
The consumer confidence registered an unexpected rise to a level of -1.00 in the UK, in May, compared to market expectations of a fall to a level of -4.00. The consumer confidence had registered a reading of -3.00 in the prior month.
UK imports advanced less than expected in 1Q 2016
On a QoQ basis, the flash imports advanced 0.80% in the UK, in 1Q 2016, less than market expectations for a rise of 1.00%. In the previous quarter, imports had climbed by a revised 0.90%.
UK exports unexpectedly declined in 1Q 2016
In 1Q 2016, the flash exports in the UK, unexpectedly dropped 0.30% on a QoQ basis, less than market expectations for a rise of 0.10%. Exports had climbed by a revised 0.10% in the prior quarter.
UK index of services rose as expected in March
The index of services advanced 0.60% on a monthly basis in the UK, in March, in line with market expectations. In the December-February 2016 period, the index of services had climbed by a revised 0.80%.
UK GDP rose less than expected in 1Q 2016
In 1Q 2016, on a YoY basis, the second estimate of gross domestic product (GDP) advanced 2.00% in the UK, less than market expectations for a rise of 2.10%. In the previous quarter, GDP had advanced 2.10%. The preliminary figures had recorded an advance of 2.10%.
UK private consumption rose more than expected in 1Q 2016
The flash private consumption in the UK registered a rise of 0.70% in 1Q 2016 on a QoQ basis, compared to a revised advance of 0.60% in the previous quarter. Markets were expecting private consumption to climb 0.50%.
UK total business investment registered a drop in 1Q 2016
The preliminary total business investment dropped 0.40% on an annual basis in the UK, in 1Q 2016. In the previous quarter, total business investment had advanced 3.00%.
UK BBA mortgage approvals fell unexpectedly in April
BBA mortgage approvals recorded an unexpected drop to 40.10 K in the UK, in April, compared to market expectations of an advance to a level of 44.70 K. In the previous month, BBA mortgage approvals had recorded a revised reading of 43.85 K.
UK index of services surprisingly eased in March
The index of services registered an unexpected drop of 0.10% on a MoM basis in the UK, in March, compared to a rise of 0.10% in the previous month. Markets were expecting the index of services to rise 0.20%.
UK government spending rose as expected in 1Q 2016
In 1Q 2016, the flash government spending recorded a rise of 0.40% on a QoQ basis in the UK, compared to a revised advance of 0.30% in the prior quarter. Markets were expecting government spending to advance 0.40%.
UK GDP rose as expected in 1Q 2016
On a quarterly basis, the second estimate of GDP advanced 0.40% in 1Q 2016, in the UK, compared to an advance of 0.60% in the prior quarter. Markets were anticipating GDP to advance 0.40%. The preliminary figures had also recorded a rise of 0.40%.
Italian wage inflation remained unchanged in April
The wage inflation in Italy remained steady at 0.00% in April.
Italian retail sales registered a rise in March
On an annual basis, the non-seasonally adjusted retail sales in Italy rose 2.20% in March. In the previous month, retail sales had risen 2.70%.
Italian annual wage inflation registered a drop in April
In April, the annual wage inflation in Italy eased to 0.60%, compared to a level of 0.80% in the previous month.
Italian retail sales dropped in March
The seasonally adjusted retail sales fell 0.60% on a MoM basis, in March, in Italy. Retail sales had registered a rise of 0.30% in the prior month.
Spanish GDP rose as expected in 1Q 2016
The final GDP advanced 3.40% on a YoY basis in 1Q 2016, in Spain, at par with market expectations. The preliminary figures had also recorded an advance of 3.40%. In the prior quarter, GDP had recorded a rise of 3.50%.
Spanish GDP advanced as expected in 1Q 2016
The final GDP in Spain rose 0.80% in 1Q 2016 on a QoQ basis, meeting market expectations. GDP had registered a similar rise in the previous quarter. The preliminary figures had also indicated a rise of 0.80%.
Swiss industrial production rose in 1Q 2016
On an annual basis, industrial production rose 1.00% in Switzerland, in 1Q 2016. In the previous quarter, industrial production had registered a revised drop of 4.30%.
Fed's Powell stated that rate hike looking appropriate 'fairly soon'
The Federal Reserve Governor, Jerome Powell, indicated that an interest rate hike may be appropriate “fairly soon” if incoming data confirms that the US economy is continuing to grow and labour markets are still tightening. He further stated that the nation’s economy remains on a solid footing and that he views ongoing job growth and evidence of rising wages as being more important than recent weakness in consumer spending and business investment.
US non-defense capital goods shipments (ex aircraft) advanced more than expected in April
The flash non-defense capital goods shipments (ex aircraft) in the US advanced 0.30% in April on a MoM basis, higher than market expectations for a rise of 0.10%. In the previous month, the non-defense capital goods shipments (ex aircraft) had risen 0.50%.
US initial jobless claims declined in the last week
The seasonally adjusted initial jobless claims recorded a drop to 268.00 K in the US, in the week ended 21 May 2016, compared to market expectations of a drop to a level of 275.00 K. Initial jobless claims had registered a level of 278.00 K in the previous week.
US pending home sales rose more than expected in April
In the US, pending home sales advanced 5.10% on a monthly basis in April, compared to a revised advance of 1.60% in the prior month. Markets were anticipating pending home sales to climb 0.70%.
US pending home sales advanced more than expected in April
On a YoY basis, pending home sales in the US recorded a rise of 2.90% in April, compared to a revised rise of 3.20% in the prior month. Markets were anticipating pending home sales to climb 0.20%.
US durable goods orders (ex transportation) rose more than expected in April
On a MoM basis, the flash durable goods orders (ex transportation) recorded a rise of 0.40% in the US, in April, more than market expectations for an advance of 0.30%. Durable goods orders (ex transportation) had dropped 0.20% in the prior month.
US continuing jobless claims recorded an unexpected rise in the last week
In the week ended 14 May 2016, the seasonally adjusted continuing jobless claims recorded an unexpected rise to a level of 2163.00 K in the US, higher than market expectations of a fall to 2142.00 K. Continuing jobless claims had registered a revised reading of 2153.00 K in the previous week.
US durable goods orders advanced more than expected in April
On a MoM basis, the flash durable goods orders registered a rise of 3.40% in the US, in April, compared to an advance of 0.80% in the prior month. Markets were anticipating durable goods orders to advance 0.50%.
US non-defense capital goods orders (ex aircraft) unexpectedly eased in April
In April, on a MoM basis, the flash non-defense capital goods orders (ex aircraft) in the US unexpectedly eased 0.80%, compared to a rise of 0.10% in the previous month. Market expectation was for the non-defense capital goods orders (ex aircraft) to rise 0.30%.
US Kansas City Fed manufacturing activity index declined surprisingly in May
The Kansas City Fed manufacturing activity index dropped unexpectedly to -5.00 in the US, in May, compared to market expectations of an advance to a level of -3.00. The Kansas City Fed manufacturing activity index had registered a level of -4.00 in the prior month.
Japanese Tokyo CPI declined as expected in May
On an annual basis, Tokyo consumer price index (CPI) eased 0.50% in May, in Japan, compared to a fall of 0.40% in the prior month. Markets were anticipating Tokyo CPI to fall 0.50%.
Japanese national CPI fell less than expected in April
On a YoY basis, the national CPI dropped 0.30% in April, in Japan, compared to a drop of 0.10% in the previous month. Markets were expecting the national CPI to drop 0.40%.
Japanese Tokyo CPI excluding fresh food declined more than expected in May
In May, Tokyo CPI excluding fresh food recorded a drop of 0.50% on a YoY basis in Japan, more than market expectations for a drop of 0.40%. Tokyo CPI excluding fresh food had recorded a drop of 0.30% in the prior month.
Japanese Tokyo CPI excluding food and energy advanced less than expected in May
On a YoY basis, in Japan, Tokyo CPI excluding food and energy rose 0.50% in May, less than market expectations for an advance of 0.60%. In the previous month, Tokyo CPI excluding food and energy had risen 0.60%.
Japanese National CPI ex-fresh food declined less than expected in April
On an annual basis, National CPI ex-fresh food registered a drop of 0.30% in Japan, in April, lower than market expectations for a fall of 0.40%. National CPI ex-fresh food had registered a similar fall in the previous month.
Japanese National CPI ex-food, energy advanced as expected in April
National CPI ex-food, energy climbed 0.70% on an annual basis in April, in Japan, in line with market expectations. In the previous month, National CPI ex-food, energy had registered a similar rise.

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