Chinese indexes this morning continue to straddle the 0% level, with the Hang Seng adding 0.64% and the Nikkei 0.46%. With the trade row between South Korea and Japan exacerbating, S.Korea’s foreign minister has called upon her US counterpart Pompeo to intervene after the clash came to a head at last week’s WTO meeting. In Australia, consumer inflation expectations for July are down a tick to 3.2% while homes investment lending contracted by 1.7% – a third of April’s number.
European indexes closed down yesterday led by the DAX’s 0.51% drop. The FTSE and CAC tail-ended with -0.8% each. June’s consumer inflation from Germany was reported this morning as improving on the monthly level, but not sufficiently so for raising the number year-on-year from it’s sub-target 1.6%. French CPIs came in level with the month before – also at a sub-par 1.4%. As Corbyn’s Labour Party grapples with the BBC over charges of racism, industrial and manufacturing data from the UK yesterday show an improvement over April (MoM), but not as much as hoped for. Manufacturing production increased by 1.4% following a 4.2% contraction the month before, and industrial production – the same increase following April’s 2.9% contraction. GDP improved by 0.3% following April’s 0.4% contraction, and the trade deficit narrowed to £-4.9 bn. Housing prices improved in June by declining 0.1%, this up from the previous month’s -0.9%. The report by the Royal Institution of Chartered Surveyors shows continuing price drops in London but the beginning of recovery throughout the rest of the country. Italy’s industrial production also improved MoM by 0.9%, after a 0.8% contraction the month before. Yesterday, Finance Minister Philip Hammond expressed fears that France would use border checks at Calais as a political post-Brexit tool to impede British exports to the mainland. Meanwhile, a German MP involved in US relations, Peter Bayer, says the Trump administration is preparing to impose tariffs on European cars in retaliation for aircraft subsidies and the facilitating of a Russian natural gas pipeline.
With the US administration celebrating its defeat over Britain’s ambassador, who resigned yesterday over his leaked memos that branded Trump’s team as dysfunctional, equities closed up yesterday ahead of upcoming quarterly earnings next week and still led by the Nasdaq’s 0.75% increase. The S&P broke through the 3k line and rests above. Yesterday’s FED minutes show a relatively wide consensus for cutting interest rates by a ¼%, with St. Louise Fed Head James Bullard iterating the sentiment, based on weak economic data. Fed Chairman Jerome Powell yesterday told Congress that the economy was staggering under the weight of disappointing factory activity, low inflation and the continuing trade war. Yesterday’s mortgage applications report for July 5th presented a 2.4% contraction, while wholesale inventories remained flat at 0.4%. In Canada, the central bank maintained interest rates yesterday at 1.75%, providing a 50-pip uptick in the CAD, which remains bound in the 0.762-767 bandwidth.
Oil surged by $2 a barrel yesterday after the EIA confirmed the previous day’s API report with a 9.5mB drawdown. Yesterday saw Iranian battleships continue harassing British oil tankers in the Gulf. The biggest losers from the upswing are major hedge funds who sold Brent futures and options last week over geo-political concerns. Gold also reaped a $30-per-ounce uptick yesterday on dollar weakness following the publication of the Fed’s latest policy meeting minutes. In related news, the Fed’s chairman, Jerome Powell called on Facebook to quell its Libra plans, pushing Bitcoin prices down 2.4%. The crypto again failed to break through the $13,000 resistance level overnight and is currently testing support at 12K.
Today’s Top Economic Events
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|09:30 AM GMT – UK
||Financial Stability Report, the BoE’s Financial Policy Committee Meeting Minutes, and Governor Carney’s speech
|11:30 AM GMT – EU
||ECB Monetary Policy Meeting Accounts
|12:30 PM GMT – US
||Initial & Continuing Jobless Claims (Jun 28), and Consumer Price Index Core (Jun). Fed’s Chair Powell continues testimony at 14:00, and Monthly Budget Statement at 18:00
|12:30 PM GMT – Canada
||New Housing Price Index (May)
|22:3015h 22m NZD Business NZ PMI (Jun)
|02:00 AM GMT (+1) – China
||New Loans (Jul), and Money Supply, Imports, Exports & Trade Balance (Jun)
|04:30 AM GMT (+1) – Japan
||Industrial Production & Capacity Utilization (May)