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Pre Market Briefing, Including US consumer prices rose in March

UK Market Snapshot

UK markets finished higher on Friday, as investor sentiment was buoyed by reports indicating a rise in consumer confidence in the US. Man Group jumped 4.2%, after a broker added the stock to its “Europe 1” list of favored stocks. Realty sector stocks, British Land and Land Securities gained 3.1% and 2.0%, respectively, after a bullish note from a broker. Tobacco sector stocks, Imperial Tobacco and British American Tobacco rallied 1.8% and 1.3%, respectively, after a broker pointed out potential M&A activity in a sector it views as inexpensive and under-leveraged. Ladbrokes surged 7.0%, after the company admitted that talks over a possible takeover of its online rival
888 have ended due to price disagreement. The FTSE 100 advanced 0.5% to close at 5,996.0, while the FTSE 250 edged up 0.7% to settle at 11,679.2.

US Market Snapshot


US markets closed higher on Friday, after reports indicated improved industrial production in March and a rise in consumer sentiment in April.
Utility sector stocks, Ameren, Integrys Energy and DTE Energy rallied 2.1%, 2.0% and 2.0%, respectively. Merck rose 1.9%, after the company announced its decision to split sales for the arthritis drug Remicade with Johnson & Johnson, to sort out an arbitration dispute. Knoll, Cubist Pharmaceuticals, Mattel and Charles Schwab jumped between 2.1% and 10.5%, after the companies reported higher-than-anticipated first-quarter earnings and sales. Bronco Drilling surged 5.8%, after Chesapeake Energy announced that it would buy the company for about $315 million. The DJIA edged up 0.5% to settle at 12,341.8, while the NASDAQ advanced 0.2% to close at 2,764.7. The S&P 500 gained 0.4% to settle at 1,319.7.

Europe Market Snapshot

Other European markets finished higher on Friday, boosted by of broker upgrades and buoyant corporate results. Merck and Fresenius Medical Care jumped 2.4% and 1.7%, respectively, after a broker recommended pharmaceutical sector stocks in Europe, citing their appealing valuations and support from the economy. Nestle climbed 2.3%, after the company reported stronger-than-anticipated first-quarter organic sales growth.
Adidas gained 2.2%, after launching the AdiZero Crazy Light shoe in New York. Siemens rallied 1.6%, as reports stated that the company would probably receive train orders worth €5 billion from Deutsche Bahn. The FTSEurofirst 300 index gained 0.3% to close at 1,131.7. Among other European markets, the German DAX Xetra 30 edged up 0.4% to close at 7,178.3, while the French CAC-40 advanced 0.1% to settle at 3,974.5.

Asia Market Snapshot

Markets in Asia are trading mostly lower this morning, as China’s move to raise banks’ reserve requirements to curb inflation, fueled growth concerns.
In Japan, exporters, Sony and Canon are trading 1.1% and 0.8% lower, respectively, as the yen rose against the dollar. TDK is trading 3.6% lower; the company receives almost a third of its revenue from China. In Hong Kong, realty sector stocks, China Overseas Land & Investment and China Resources Land are trading 1.9% lower, each. In South Korea, Honam Petrochemical is trading 5.1% higher, after the company announced its plans to buy out minority shareholders in subsidiary KP Chemical Corp. this year. The Nikkei
225 index is trading 0.1% lower, at 9,582.3. Hang Seng index is trading 0.2% up, at 24,045.4, while the Kospi index is trading 0.2% lower, at 2,137.2.

Commodity, Currency and Fixed Income Snapshots

Crude Oil


At 0344GMT today, Brent crude oil one month futures contract slid 0.21% or $0.26, to trade at $123.19 per barrel, as Ali al-Naimi, Saudi Arabia’s Oil Minister announced that the nation cut its oil output by around 800,000 barrels a day in March, due to oversupply. He further stated that oil production in April was expected to rise slightly from March levels. On Friday, the contract climbed 1.19% or $1.45, to settle at $123.45 per barrel.

Gold

At 0344GMT today, gold futures contract marginally rose 0.01% or $0.20, to trade at $1,486.2 per ounce. On Friday, the contract jumped 0.92% or $13.60, to close at $1,486.0 per ounce, as investors opted for the yellow metal as a hedge against the risk of rising inflation.

Currency

At 0344GMT today, the EUR weakened against the USD, losing marginally 0.07%, to trade at $1.4387, as reports of a sharp sell-off in Irish, Greek and Portuguese bonds amplified concerns about the currency’s stability. On Friday, the EUR lost 0.72% versus the USD, to close at $1.4397, after the consumer price index (CPI) in the Euro-zone rose 2.7% in March, the fastest since October 2008, compared to an initially estimated rise of 2.6%.

At 0344GMT today, the GBP weakened against the USD, losing marginally 0.03%, to trade at $1.6307. On Friday, the GBP retreated against the USD, losing 0.34%, to close at $1.6312, after the Thomson Reuters/University of Michigan's consumer sentiment index rose to a reading of 69.6 in April, compared to a reading of 67.5 posted in March. Additionally, the industrial production in the US increased 0.8% MoM in March and the Federal Reserve Bank of New York revealed that its general business conditions index rose to a reading of 21.7 in April.

Fixed Income

In the US, long term treasury prices rose on Friday, pushing the yields on 30-year bonds lower, as investors expressed concerns over soaring inflation, after reports indicated that US consumer prices rose 0.5% in March, and amid worries over Euro-zone’s debt crisis. Yields on 10-year notes decreased 8 basis points to 3.43%, while yields on 2-year notes decreased 6 basis points to 0.71%. Meanwhile, 30-year bond yields decreased 6 basis points to 4.47%.

Key Economic News

*UK house price index rose in April, indicates Rightmove*

Rightmove reported that on a monthly basis, house prices in the UK climbed 1.7% in April, following a 0.8% rise posted in the previous month.

*Euro-zone’s inflation rose more-than-estimated in March*

On an annual basis, the consumer price index (CPI) in the Euro-zone rose 2.7% in March, the fastest since October 2008, compared to an initially estimated rise of 2.6%. Meanwhile, the monthly CPI rose 1.4%. Markets had estimated the CPI to rise 1.3% MoM in March.

*Euro-zone’s trade balance narrowed in February*

The trade deficit in the Euro-zone narrowed to €1.5 billion in February, following a deficit of €15.6 billion recorded in January.

*US industrial production rose more-than-expected in March*

On a monthly basis, the industrial production in the US increased 0.8% in March, following an upwardly revised 0.1% increase recorded in the previous month. Market had estimated the industrial production to rise 0.6% MoM in March, compared to the 0.1% decline originally reported for the previous month. Additionally, the capacity utilisation rate rose to 77.4% in March from a revised 76.9% recorded in the previous month.

*New York manufacturing conditions improved in April*

The Federal Reserve Bank of New York revealed that its general business conditions index rose to a reading of 21.7 in April, compared to a reading of 17.5 posted in March. Market had expected the index to remain unchanged at 17.5 in April.

*US consumer prices rose in March*

On a monthly basis, the CPI in the US increased 0.5% in March, compared to a 0.5% rise recorded in February. The increase in the CPI matched market estimates. Additionally, the annual CPI rose 2.7% in March, the biggest annual increase since December 2009.

*US net TIC flows increased in February*

The total net TIC flows in the US increased to $97.7 billion in February from $30.6 billion recorded in January. Meanwhile, the long term inflows fell to $26.9 billion in February, compared to $51.1 billion recorded in the previous month.

*US consumer sentiment rose in April*

The Thomson Reuters/University of Michigan's consumer sentiment index rose to a reading of 69.6 in April, compared to a reading of 67.5 posted in March. Market had expected the index to post a reading of 68.5 in April.

*Japan’s industrial output growth for February revised upwards*

On a monthly basis, the industrial production in Japan increased 1.8% in February, compared to an initially predicted rate of 0.9%. Meanwhile, the seasonally adjusted capacity utilisation rose 2.9% MoM in February, compared 1.0% rise recorded in the previous month.


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