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Market briefing:US markets ended mostly lower yesterday, after the US Federal Reserve kept door open for a September rate hike

Published: 08:28 28 Jul 2016 BST

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UK Market Snapshot
UK markets finished higher yesterday, after data showed that the nation’s economy expanded at a faster-than-expected rate in the second quarter. Rightmove soared 8.7%, after it posted a jump in its pre-tax profit for the six months ended 30 June and remained confident of achieving its full year expectations. ITV surged 6.8%, after it reported a rise in its revenue in the first half of the year due to the Euro 2016 soccer tournament and on expansion of its studio production business. Taylor Wimpey climbed 6.7%, following an increase in its half yearly pre-tax earnings and stated that it is fully committed to its dividend policy. On the contrary, Lancashire Holdings slid 1.9%, after reporting a drop in its first half profits. The FTSE 100 advanced 0.4%, to close at 6,750.4, while the FTSE 250 rose 1.2%, to settle at 17,265.9.
US Market Snapshot
US markets ended mostly lower yesterday, after the US Federal Reserve kept door open for a September rate hike citing that near-term risks to the economic growth have eased. Alere sank 28.6%, on reports that it is being summoned by the Justice Department’s criminal-fraud division and would be sold to Abbott Laboratories, up 0.2%, for $5.8 billion. Coca-Cola dipped 3.3%, as its second quarter revenue trailed analysts’ projections. Bucking the trend, Garmin soared 11.6%, following upbeat profit in the second quarter and as it boosted its earnings outlook for 2016. Apple jumped 6.5%, after its third quarter revenue decline was a smaller-than-expected. Boeing gained 0.8%, after it reported lower than expected loss for the second quarter. The S&P 500 slipped 0.1%, to settle at 2,166.6. The DJIA slid marginally, to settle at 18,472.2, while the NASDAQ advanced 0.6%, to close at 5,139.8.
Europe Market Snapshot
Other European markets closed in positive territory yesterday, led by gains in automobile sector and luxury goods makers. Peugeot rallied 9.3%, as its net earnings more than doubled in the six months ended 30 June compared to the same period of preceding year. LVMH Moet Hennessy Louis Vuitton surged 7.5%, after it reported its first half earnings that matched analysts’ projections. Peers, Kering and Christian Dior rose 2.4% and 3.9%, respectively. Banco Santander advanced 2.9%, as its net income for the second quarter beat market expectations. On the losing side, Deutsche Bank lost 4.2%, after its net profit plunged to €18.0 million in the second quarter from €796.0 million a year ago. The FTSEurofirst 300 index gained 0.4%, to close at 1,351.8. Among other European markets, the German DAX Xetra 30 rose 0.7%, to close at 10,319.6, while the French CAC-40 advanced 1.2%, to settle at 4,447.0.
Asia Market Snapshot
Markets in Asia are trading weaker this morning. In Japan, Fujifilm Holdings has plummeted 9.6%, after reporting downbeat earnings for the first quarter. Nintendo has declined 5.4%, as it posted an operating loss of $47.33 million in the first quarter. On the flipside, Advantest has rallied 11.2%, after raising its projected earnings for the full year. Alps Electric has surged 10.2%, following higher than expected profit in the first quarter. In Hong Kong, oil firms, PetroChina and CNOOC have fallen 0.9% and 2.3%, respectively. In South Korea, Samsung Electronics has slid 1.3%, despite reporting its most profitable quarter in two years, amid strong sales of its flagship Galaxy S7 smartphone. The Nikkei 225 index is trading 0.7% lower at 16,550.3. The Hang Seng index is trading 0.2% down at 22,164.2, while the Kospi index is trading 0.4% lower at 2,016.8.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.25% or $0.11 higher at $43.58 per barrel. Yesterday, the contract declined 3.12% or $1.40, to settle at $43.47 per barrel, after the Energy Information Administration reported that US crude inventories unexpectedly climbed 1.7 million barrels in the week ended 22 July 2016.
Gold
At 0330GMT today, Gold futures contract is trading 1.41% or $18.70 higher at $1345.40 per ounce. Yesterday, the contract advanced 0.45% or $5.90, to settle at $1326.70 per ounce, after the US durable goods orders declined more than anticipated in June.
Currency
At 0330GMT today, the EUR is trading 0.14% higher against the USD at $1.1073, ahead of Germany’s flash consumer prices and unemployment rate for July, set for release later in the day. Yesterday, the EUR strengthened 0.66% versus the USD, to close at $1.1058, after German GfK consumer confidence came in slightly better than expected for August.
At 0330GMT today, the GBP is trading marginally lower against the USD at $1.3222, ahead GfK consumer confidence data for July, which will release tonight. Yesterday, the GBP strengthened 0.71% versus the USD, to close at $1.3223, after Britain’s GDP grew at a faster rate than expected in the second quarter of 2016.
Fixed Income
In the US, long term treasury prices rose and pushed yields lower, after the US Fed kept its key interest rates unchanged. Moreover, the US durable goods orders plunged in June, recording its biggest drop in almost two years. Yesterday, yield on 10-year notes fell 5 basis points to 1.52%, while yield on 2-year notes lost 2 basis points to 0.73%. Meanwhile, 30-year bond yield fell 5 basis points to 2.23%.

Key Economic News
UK index of services advanced as expected in May

In May, the index of services rose 0.30% in the UK, on a monthly basis, in line with market expectations. The index of services had risen 0.50% in the February-April 2016 period.
UK index of services unexpectedly fell in May
On a monthly basis, the index of services in the UK unexpectedly fell 0.10% in May, compared to a rise of 0.60% in the prior month. Market anticipation was for the index of services to rise 0.10%.
UK CBI distributive trade survey's retail sales balance declined in July
The CBI distributive trade survey's retail sales balance eased to 14.00% in the UK, in July, compared to a level of 4.00% in the previous month. Markets were expecting the CBI distributive trade survey's retail sales balance to ease to a level of 1.00%.
UK GDP advanced more than expected in 2Q 2016
In 2Q 2016, the flash gross domestic product (GDP) recorded a rise of 2.20% on a YoY basis in the UK, compared to a rise of 2.00% in the previous quarter. Market expectation was for GDP to advance 2.10%.
UK GDP rose more than expected in 2Q 2016
On a QoQ basis, the flash GDP climbed 0.60% in 2Q 2016, in the UK, higher than market expectations for an advance of 0.50%. In the previous quarter, GDP had registered a rise of 0.40%.
Euro-zone M3 money supply advanced as expected in June
In June, M3 money supply advanced 5.00% in the Euro-zone on a YoY basis, in line with market expectations. In the prior month, M3 money supply had advanced 4.90%.
German consumer confidence index recorded a decline in August
Compared to a reading of 10.10 in the previous month the consumer confidence index dropped to 10.00 in August, in Germany. Markets were expecting the consumer confidence index to fall to a level of 9.90.
German import price index declined as expected in June
On an annual basis, in June, the import price index registered a drop of 4.60% in Germany, compared to a fall of 5.50% in the prior month. Market anticipation was for the import price index to ease 4.60%.
German import price index rose less than expected in June
In June, the import price index in Germany registered a rise of 0.50% on a monthly basis, lower than market expectations for a rise of 0.60%. The import price index had climbed 0.90% in the prior month.
French PPI advanced in June
In France, the producer price index (PPI) registered a rise of 0.40% on a MoM basis, in June. The PPI had registered a revised similar rise in the previous month.
French consumer confidence fell in July
Consumer confidence eased to 96.00 in France, in July, in line with market expectations. In the prior month, consumer confidence had registered a reading of 97.00.
Italian business confidence index advanced unexpectedly in July
Compared to a revised level of 102.90 in the prior month the business confidence index in Italy registered an unexpected rise to a level of 103.10 in July. Markets were expecting the business confidence index to fall to 102.00.
Italian consumer confidence index rose surprisingly in July
In Italy, the consumer confidence index climbed unexpectedly to a level of 111.30 in July, higher than market expectations of a fall to a level of 109.20. In the previous month, the consumer confidence index had recorded a reading of 110.20.
Spanish retail sales advanced more than expected in June
On a YoY basis, retail sales registered a rise of 5.60% in June, in Spain, more than market expectations for a rise of 3.60%. In the prior month, retail sales had recorded a rise of 2.30%.
Swiss UBS consumption indicator climbed in June
UBS consumption indicator climbed to 1.34 in June, in Switzerland. UBS consumption indicator had registered a revised level of 1.24 in the prior month.
US Fed left rates unchanged at July meeting
The US Federal Reserve (Fed) kept the overnight interest rate target steady in the 0.25% to 0.5% range and reiterated that it continues to closely monitor global economic and financial developments. Moreover, the Fed cited improvements in the US labor market and stated that near-term risks to the economy have diminished.
US durable goods orders declined more than expected in June
The flash durable goods orders slid 4.00% in the US on a MoM basis in June, compared to a drop of 2.30% in the previous month. Markets were anticipating durable goods orders to ease 1.40%.
US pending home sales advanced less than expected in June
In the US, pending home sales climbed 0.30% on a YoY basis in June, lower than market expectations for a rise of 3.00%. Pending home sales had climbed 2.40% in the previous month.
US mortgage applications registered a drop in the last week
Mortgage applications recorded a drop of 11.20% in the US on a weekly basis, in the week ended 22 July 2016. In the previous week, mortgage applications had registered a drop of 1.30%.
US durable goods orders (ex transportation) unexpectedly declined in June
The preliminary durable goods orders (ex transportation) unexpectedly dropped 0.50% on a monthly basis in June, in the US, compared to a drop of 0.30% in the previous month. Markets were anticipating durable goods orders (ex transportation) to rise 0.30%.
US pending home sales advanced less than expected in June
On a MoM basis, pending home sales rose 0.20% in the US, in June, compared to a drop of 3.70% in the previous month. Market expectation was for pending home sales to climb 1.20%.
Japanese small business confidence index advanced in July
The small business confidence index recorded a rise to 47.80 in July, in Japan. The small business confidence index had recorded a reading of 46.50 in the prior month.

 

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