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ECB boss again vows to do what it takes to support eurozone

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UK Market Snapshot 

UK markets finished higher yesterday, amid speculations that the Chinese central bank might cut its benchmark rate and ahead of the Federal Reserve’s policy meeting. The FTSE 100 advanced 0.7%, to close at 6,374.2, while the FTSE 250 rose 0.6%, to settle at 13,994.4. 

US Market Snapshot 

US markets closed higher yesterday, as investors await the US Federal Reserve’s interest rate decision and monetary policy statement. The DJIA rose 0.9%, to settle at 15,318.2, while the NASDAQ advanced 0.9%, to close at 3,482.2. The S&P 500 gained 0.8%, to settle at 1,651.8. 

Europe Market Snapshot 

Other European markets finished mostly lower yesterday, as investors exercised caution ahead of the outcome of US Federal Reserve’s policy meeting. Among other European markets, the German DAX Xetra 30 rose 0.2%, to close at 8,229.5, while the French CAC-40 shed 0.1%, to settle at 3,860.6. 

Asia Market Snapshot 

Markets in Asia are trading mostly lower this morning. In Japan, the Nikkei 225 index is trading 1.3% higher, at 13,170.0. Hang Seng index is trading 1.2% down, at 20,972.4, while the Kospi index is trading 0.7% lower, at 1,887.2. 

Commodity, Currency and Fixed Income Snapshots 

Crude Oil 

At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.03% or $0.03 higher at $106.05 per barrel. Yesterday, the contract advanced 0.52% or $0.55, to settle at $106.02 per barrel, amid increasing political unrest in Middle East regions and after the American Petroleum Institute reported that the US crude oil inventories dropped 4.3 million barrels for the week ended 14th June. 

Gold 

At 0330GMT today, gold futures contract is trading 0.14% or $1.9 lower at $1365 per ounce. Yesterday, the contract fell 1.17% or $16.2, to settle at $1366.9 per ounce. 

Currency 

At 0330GMT today, the EUR is trading at $1.339 against the USD, marginally losing 0.03%, ahead of the euro zone’s construction output data to be released later today. Yesterday, the EUR strengthened 0.23% versus the USD, to close at $1.3394, after reports showed that German and euro zone economic sentiment data improved in June. 

At 0330GMT today, the GBP weakened against the USD, slightly losing 0.04%, to trade at $1.5626, ahead of the Bank of England minutes. Yesterday, the GBP weakened against the USD by 0.54%, to close at $1.5632. Annual consumer prices in the UK rose 2.7% in May, more than market forecasts of 2.6% rise. 

Fixed Income 

In the US, long term treasury prices traded mixed, amid uncertainty over the US Federal Reserve’s stance over its asset purchase program ahead its policy setting meeting later today. Yesterday, yield on 10-year notes rose 1 basis point to 2.20%, while yield on 2-year notes remained unchanged at 0.27%. Meanwhile, 30-year bond yield decreased 1 basis point to 3.34%.  

Key Economic News 

UK consumer price inflation accelerated in May 

On a monthly basis, the Consumer Price Index (CPI) in the UK rose 0.2% in May, following a same rate of rise recorded in the previous month. Market had expected the index to rise 0.1% MoM in May. Meanwhile, on an annual basis, CPI rose 2.7% in May, from 2.4% recorded in April. On an annual basis, core CPI rose 2.2% in May, following a 2.0% rise recorded in the previous month. Separately, on a yearly basis, the output price inflation also rose 1.2% in May, from 0.9% recorded in April. 

UK producer prices fell in May 

On a non-seasonally adjusted monthly basis, the input Producer Price Index (PPI) in the UK fell 0.3% in May, following a 2.3% drop recorded in the previous month. Market had expected the index to rise 0.1% MoM in May. 

UK retail prices rose in line with the market expectations in May 

On an annual basis, Retail Price Index (RPI) in the UK advanced 3.1% in May, in line with the market expectations and following a 2.9% increase recorded in April. On a monthly basis, RPI edged up 0.2% in May, in line with the market expectations and following a 0.3% rise recorded in the previous month. 

UK House Price Index rose in April, indicates DCLG 

On an annual basis, the DCLG House Price Index in the UK increased 2.6% in April to an average house price of £238,000, in line with the market expectations and following a 2.7% growth recorded in March. 

German economic confidence rose more-than-expected in June 

The ZEW Economic Sentiment Index in Germany climbed to a reading of 38.5 in June, marking its highest level in three months and compared to a reading of 36.4 recorded in the previous month. Market had expected the index to rise to a reading of 38.1 in June. However, the Current Situation Index decreased to a reading of 8.6 in June, from a reading of 8.9 in May. 

ECB rates are becoming more effective again, say’s ECB chief Mario Draghi 

The European Central Bank President Mario Draghi stated that if required, the ECB is prepared to consider further non-standard monetary policy and ready to tackle any unintended consequences to aid the euro zone economy. 

European new car sales fell sharply in May, indicates ACEA 

A survey by the European Automobile Manufacturers Association (ACEA) indicated that, on an annual basis, the sale of new passenger cars in the European Union decreased 5.9% to 1,042,742 units in May, marking its lowest level since 1993. Meanwhile, during the five months ended May, car sales fell 6.8% to 5,0,70840 units from the corresponding period a year earlier. 

US housing starts rose less-than-expected in May 

On a seasonally adjusted basis, housing starts in the US climbed 6.8% to an annual rate of 914K units in May, from an upwardly revised estimate of 856K recorded in April. Market had expected housing starts to rise to an annual rate of 955K in May, from the 853K originally reported for the previous month. 

US consumer prices rose slightly less-than-expected in May 

On a monthly basis, the Consumer Price Index (CPI) in the US rose 0.1% in May, compared to a 0.4% fall recorded in the previous month. Market had expected the index to rise 0.2% MoM in May. 


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