UK Market Snapshot
UK markets closed higher yesterday, helped by gains in mining sector stocks and a weaker Pound. Anglo American, BHP Billiton and Glencore climbed 1.7%, 1.8% and 3.6%, respectively. Petrofac gained 3.2%, after the company bagged a contract with Salalah LPG to develop a major liquefied petroleum gas project in Oman worth about $600.0 million. Bucking the trend, William Hill dropped 2.1%, as the company warned that its full-year operating profit for 2016 would be at the lower end of its guided range due to unfavourable football and horseracing results in December. Lloyds Banking Group slipped 1.0%, after the UK government announced that it had reduced its stake in the lender to below 6.0%. The FTSE 100 advanced 0.4%, to close at 7,237.8, while the FTSE 250 rose 0.2%, to settle at 18,379.6.
US Market Snapshot
US markets finished mostly lower yesterday, weighed down by a drop in energy sector stocks. Devon Energy and Range Resources dipped 4.3% each, while Southwestern Energy declined 4.9%. McDonald’s lost 0.3%, amid news that the company had decided to sell its China and Hong Kong business to CITIC and Carlyle Group for up to $2.08 billion. On the contrary, Surgical Care Affiliates surged 16.2%, after UnitedHealth Group, down 0.3%, agreed to acquire the company for about $2.3 billion. Merrimack Pharmaceuticals edged up 1.9%, after the company announced that it would sell its oncology assets which include its pancreatic cancer drug ‘Onivyde’ to French drugmaker Ispen in an upfront cash deal of $575.0 million and an additional $450.0 million contingent on regulatory approval-based payments. The S&P 500 slipped 0.4%, to settle at 2,268.9. The DJIA shed 0.4%, to settle at 19,887.4, while the NASDAQ advanced 0.2%, to close at 5,531.8.
Europe Market Snapshot
Other European markets closed in negative territory yesterday, following some dismal corporate updates. Fresenius Medical Care plunged 6.5%, after the dialysis provider stated that its US division received a subpoena from federal prosecutors related to its links with the American Kidney Fund. Deutsche Lufthansa tumbled 5.8%, after it projected that its fuel costs would rise to €5.3 billion in 2017. On the upside, Volkswagen advanced 3.4%, as it posted a rise in its VW-brand car sales in 2016. Fiat Chrysler Automobiles gained 1.4%, following its plans to invest $1.0 billion in two existing plants in the US which would create 2,000 new jobs. The FTSEurofirst 300 index lost 0.5%, to close at 1,437.7. Among other European markets, the German DAX Xetra 30 slipped 0.3%, to close at 11,564.0, while the French CAC-40 shed 0.5%, to settle at 4,887.6.
Asia Market Snapshot
Markets in Asia are trading mostly weaker this morning. In Japan, Yamato Holdings and Nichirei have declined 2.6% and 3.1%, respectively. On the contrary, Takeda Pharmaceutical has gained 1.4%, after it announced that it will acquire US cancer drug developer, Ariad Pharmaceuticals, in a deal valued at $5.2 billion. Toyota Motor has risen 0.2%, after its North American CEO announced plans to invest $10.0 billion in US over the next five years. In Hong Kong, oil stocks, PetroChina and CNOOC have lost 0.8% and 1.1%, respectively. In South Korea, index majors, Samsung Electronics and LG Electronics have dropped 0.1% and 2.8%, respectively. News emerged that electronic giants are considering building factories for the production of home appliances in the US. The Nikkei 225 index is trading 0.9% lower at 19,287.4. The Hang Seng index is trading 0.5% up at 22,675.2, while the Kospi index is trading 0.3% lower at 2,043.1.
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Commodity, Currency and Fixed Income Snapshots
At 0430GMT today, Brent Crude Oil one month futures contract is trading 0.36% or $0.20 higher at $55.14 per barrel, ahead of the American Petroleum Institute’s weekly crude oil inventory data, scheduled to be released later today. Yesterday, the contract tumbled 3.78% or $2.16, to settle at $54.94 per barrel, amid mounting concerns over a surge in Iraq’s crude exports and rising US crude oil production which could undermine OPEC’s efforts to cut global oil glut.
At 0430GMT today, Gold futures contract is trading 0.11% or $1.30 higher at $1186.20 per ounce. Yesterday, the contract advanced 0.98% or $11.50, to settle at $1184.90 per ounce, following weakness in the greenback and losses in US equities.
of major economic data in the Euro-zone today, investors will look forward to the US JOLTS job openings for November and the NFIB business optimism index for December, set to release later in the day. Yesterday, the EUR strengthened 0.40% versus the USD, to close at $1.0572, after the Germany trade balance expanded in November from previous month. Additionally, the Euro-zone’s Sentix investor confidence index jumped to a level of 18.2 in January, recording its highest level since August 2015.
At 0430GMT today, the GBP is trading a tad higher against the USD at $1.2162. Yesterday, the GBP fell 0.98% versus the USD, to close at $1.2160, pressured by renewed concerns about a ‘Hard Brexit’ following comments by UK’s Prime Minister, Theresa May. Meanwhile, data showed that the UK Halifax house prices advanced more than anticipated in December.
In the US, long term treasury prices rose and pushed yields lower, amid sharp losses in crude oil prices. Yesterday, yield on 10-year notes declined 4 basis points to 2.38%, while yield on 2-year notes fell 1 basis point to 1.21%. Meanwhile, 30-year bond yield dropped 3 basis points to 2.97%.
Key Economic News
UK Halifax house price index rose more than expected in December
In December, on a monthly basis, the Halifax house price index advanced 1.70% in the UK, more than market expectations for a rise of 0.30%. In the previous month, the Halifax house price index had advanced by a revised 0.60%.
UK retail sales across all sectors registered a rise in December
In the UK, retail sales across all sectors advanced 1.00% in December on a YoY basis. Retail sales across all sectors had registered a rise of 0.60% in the previous month.
UK Halifax house price index advanced more than expected in the October-December 2016 period
In the October-December 2016 period, the Halifax house price index advanced 6.50% on a YoY basis in the UK, more than market expectations for a rise of 5.80%. The Halifax house price index had recorded a rise of 6.00% in the September-November 2016 period.
Euro-zone unemployment rate remained flat in November
The unemployment rate remained steady at a level of 9.80% in November, in the Euro-zone. Market expectation was for the unemployment rate to record a flat reading.
Euro-zone investor confidence index climbed in January
The investor confidence index recorded a rise to 18.20 in the Euro-zone, in January, compared to a reading of 10.00 in the previous month. Markets were expecting the investor confidence index to rise to 12.80.
German industrial production rose more than expected in November
On a YoY basis, the non-seasonally & working day adjusted industrial production registered a rise of 2.20% in November, in Germany, higher than market expectations for a rise of 1.90%. In the previous month, industrial production had recorded a revised rise of 1.60%.
German exports advanced more than expected in November
On a MoM basis in Germany, the seasonally adjusted exports advanced 3.90% in November, compared to an advance of 0.50% in the prior month. Markets were anticipating exports to climb 0.50%.
German imports advanced more than expected in November
In November, the seasonally adjusted imports climbed 3.50% in Germany on a monthly basis, compared to a revised rise of 1.20% in the prior month. Markets were expecting imports to rise 1.10%.
German trade surplus expanded in November
Germany has posted the seasonally adjusted trade surplus of €22.60 billion in November, from a revised trade surplus of €19.40 billion in the prior month. Market anticipation was for a trade surplus of €20.30 billion.
German industrial production rose less than expected in November
In Germany, the seasonally adjusted industrial production registered a rise of 0.40% on a MoM basis in November, lower than market expectations for a rise of 0.60%. Industrial production had advanced by a revised 0.50% in the previous month.
German current account surplus expanded in November
In November, the non-seasonally adjusted current account surplus in Germany rose to €24.60 billion, from a revised current account surplus of €19.40 billion in the prior month. Markets were anticipating the country's current account surplus to expand to €22.10 billion.
French business sentiment index climbed surprisingly in December
In December, the business sentiment index climbed unexpectedly to a level of 102.00 in France, higher than market expectations of a steady reading. The business sentiment index had recorded a level of 101.00 in the prior month.
Italian unemployment rate recorded an unexpected rise in November
Compared to a revised reading of 11.80% in the prior month unemployment rate in Italy rose unexpectedly to 11.90% in November. Market expectation was for unemployment rate to ease to a level of 11.60%.
Swiss real retail sales registered a rise in November
Real retail sales advanced 0.90% on a YoY basis in Switzerland, in November. Real retail sales had registered a revised drop of 0.70% in the prior month.
US consumer credit rose more than expected in November
Consumer credit in the US rose $24.53 billion in November, compared to a revised rise of $16.17 billion in the prior month. Market anticipation was for consumer credit to advance $18.40 billion.
Canada's overall business lending conditions slid in 4Q 2016
The Bank of Canada, in its quarterly senior loan officer survey on business-lending practices, indicated that overall business lending conditions in Canada eased during the 4Q 2016, with the reading coming in at -2.60 from a reading of 3.30 in the previous quarter.
Chinese CPI advanced less than expected in December
In December, the consumer price index (CPI) recorded a rise of 2.10% in China on a YoY basis, less than market expectations for a rise of 2.20%. The CPI had risen 2.30% in the prior month.
Chinese CPI advanced less than expected in December
In December, on a monthly basis, the CPI climbed 0.20% in China, compared to an advance of 0.10% in the prior month. Market expectation was for the CPI to advance 0.30%.
Chinese PPI advanced more than expected in December
In December, the producer price index (PPI) recorded a rise of 5.50% on an annual basis in China, more than market expectations for an advance of 4.60%. The PPI had recorded a rise of 3.30% in the previous month.