European indices yesterday closed marginally in the green, after manufacturing data from across the region mostly managed to hold on to expectations. Italy even managed to shine with a ½ point increase to 49.7 – a full point above expectations.
Out of step was the UK’s reading, which at 49.4 shows a 4-point drop into contractional territory in May. Like-for-like Retail Sales also contracted by 3% in May YoY.
Still, the pound continues a 4-day uptrend, with US President Donald Trump currently in the UK, promising a “big trade deal” the moment Britain “casts off the shackles of EU membership” (Bloomberg). Meanwhile, French President Emmanuel Macron yesterday said the October 31st Brexit deadline should not be extended.
The USD performed a perfect dead cat’s bounce yesterday after the FED’s James Bullard told reporters that an interest rate cut “may be warranted soon”.
Adding weight to the drama was Markit’s Manufacturing PMI, which showed a 2 point drop to 50.5 in May – a notch above contractionary territory, a 0.7 point drop in the ISM reading and a drop to zero in construction spending.
Vehicle sales increased to 17.3mn, and ISM’s Prices Paid indicator of business sentiment added 3 points to come in at 53.2.
In shares, amidst a general slowing of equities blood-letting, the Nasdaq still lost 1.61% yesterday as major shares in the index fell on pending Congressional hearings on the competitive conduct of Facebook (-7.51%), Google (-6.12%) and Amazon (-4.64%).
The Nikkei 225 Asian Review reports that China is diverting US-destined goods through Vietnam, Taiwan Mexico and other ports to disguise origin and avoid US tariffs.
During Q1, direct exports of machinery, electrical equipment and parts from China to the US dropped by about $10 bn YoY. In Australia, in perfect harmony with its central bank’s decision overnight to cut a ¼% off its interest rate – now 1.25%, retail sales fell in May by 0.1%, and current accounts showed a worse-than-expected $2.9bn deficit in Q1.
Gold hit resistance overnight at 1332, putting to rest a 5-day surge. Oil surged $2 barrel yesterday, then immediately lost them ahead of tonight’s API report. The commodity is trending sideways, for now, after Saudi Energy Minister Khalid al-Falih told the local press that he would do “what is needed to sustain market stability … drawing down inventories.” (Reuters)
|08:00 AM GMT – Italy||Unemployment (Apr)|
|08:30 AM GMT – UK||Markit Construction PMI (May)|
|09:00 AM GMT – EU||Unemployment Rate (Apr), & Consumer Price Index (May)|
|12:55 PM GMT – US||Redbook Index (May 31), Business Conditions Index (May) at 13:45, Factory Orders (Apr) at 14:00 & Fed Head Powell Speech (n.d.)|
|21:30 PM GMT – OIL||API Weekly Crude Oil Stock (May 31)|
|00:30 AM GMT (+1) – Japan||Markit Services PMI (May)|
|01:30 AM GMT (+1) – Australia||Gross Domestic Product (Q1)|
|01:45 AM GMT (+1) – China||Caixin Services PMI (May)|
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