Good morning :) Markets Overnight US markets ended lower overnight on the fears that I had mentioned yesterday of the Fed scaling back the bond purchasing growing yet again with the better than expected economic data coming through. Both the S&P and the Dow extended losses into a third session, marking the longest losing streak since late September. Investors took profit overnight amid signs of a weak holiday shopping season, and upon heading into the busy week of data, whilst safe havens such as the yen and Treasuries rose. Trading volumes however were thin ahead of this weeks data. In data overnight, auto sales rose in November, boosted by aggressive discounting and the continued popularity of big pickup trucks. Three Detroit automakers and two of Japans top three automakers reported year to year increases. European markets also fell sharply yesterday, closing at a six week low, after the disappointing data from the euro zone coupled with the concerns of the Fed scaling back the stimulus sooner rather than later. Resource stocks were the heaviest hit, after Rio Tinto stated it would halve its capital spending by 2015 due to a fragile market. Data released from the euro zone also hampered sentiment, with monthly producer prices index for October showing a decline of 0.5% - worse than expected, as was the yearly decline, and was the first monthly decline for the numbers in five months. The annual inflation rate also fell to a nearly 4-year low in a fresh sign of a sharp fall in inflationary pressures. All major bourses in Europe, including the FTSE 100 in the UK, closed lower. The FTSEs decline however was softened with positive data released from the UK showing the construction industry grew at its fastest pace in nearly six years in November, and the manufacturing sector also accelerated in November, hitting its strongest level of output and employment since August 2007. This gave credence to the UK governments claims of a robust recovery in the UK economy. UK finance minister George Osborne is due to deliver his annual Autumn Statement later in the week on the state of the economy, and will most likely comment on the fact that this shows his economic plan for the country is working. The data caused the pound to hit a five year high against a basket of currencies as expectations continue to rise that the BOE could raise interest rates soon. The bank meets later in the week. Meanwhile PM David Cameron has promised Chinas leaders that he would advocate a multi-billion-dollar free trade deal between Beijing and the European Union, irritating the EU executive which rejected the move as premature. New fears have surfaced in Europe as the cost of insuring Ukraines government debt against default jumped, combined with the political worries that continue for the region as the President Victor Yanukovich left the Ukraine for a state visit to China. Asian markets closed mixed yesterday, however the Nikkei closed at a six year high as a result of the weaker yen and comments from the BOJ. Kuroda was speaking at a conference late Monday and stated that we are ready to adjust monetary policy without hesitation if risks materialize, causing the yen to weaken to a new six month low, lifting large-cap stocks and exporters. However after the Asian close the yen advanced against the dollar, reversing losses sustained earlier in the day, as investors looked for safety in the yen as global markets fell. Trading volumes in the yen have been almost double the average over the past month, according to Reuters. Shanghai reversed earlier losses to climb higher with a rally in infrastructure stocks, and property shares climbed after a private survey showed new home prices have continued to rise, faster in November than in previous months, however this has sparked fears of further regulations from the government. Sydney closed at a seven week low for a second straight session after the RBA left its key interest rate steady at a record low of 2.5%. The RBA did reiterate in their policy speech that the Aussie was still uncomfortably high, that the economy needs a weaker currency and that it sees below-trend growth continuing in the near term. Economic news from Australia showed the nations current account deficit widened in the third quarter from the second quarter, however, October retail sales came in higher beating estimates. The Kospi fell yesterday to a one week closing low with sharp declines in auto makers. Major news today includes AUD, GBP, USD and CAD. Have a great day! Elli.
Posted on: Wed, 04 Dec 2013 00:10:50 +0000
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