Asian equities had surged yesterday after China eased funding restrictions on infrastructure projects and the Peoples Bank added 0.2% to the Yuan. Consumer inflation in China rose 2.7% in May YoY, up from 2.5% to a 15-month high, while Japan’s machinery orders surprised strongly to the upside in April, growing 5.2% MoM. This morning sees a danker atmosphere, with all markers red, led by the Hang Seng’s 1.9% contraction, the Shenzhen’s -0.85% and the Nikkei’s -0.3. Adding to the downward pressure on Hong Kong markets, demonstrations continue against the proposed extradition law that would reflect negatively on business confidence. After Australia’s business confidence reading soared to 7 from zero in May, last night’s Westpac consumer confidence measure for June shows a 0.6% contraction.
European indexes opted for Asian gains over US losses yesterday, gaining up to 0.96% (DAX) on auto shares (Daimler +1.82% on opening) – the 3rd day of gains in a row. Investors are less optimistic, though, as the Sentix indicator shows a 3.3 point contraction in June. As reported yesterday, UK earnings added a tick to land on 3.4% for the 3 months preceding April. Unemployment could see an increase, though, after 23,200 more individuals made unemployment claims in May – a 3.1% increase (0.1% more than in April). Meanwhile, Reuters London reports that institutional investors are reacting to global geopolitical uncertainties by moving investments to higher-yielding but riskier assets due to projected dovishness by most of the world’s central banks, which makes low-yield but secure government bonds even less attractive. And yesterday, Bank of England Deputy Governor Ben Broadbent joined the chorus of colleagues in calling for an interest rate hike.
Dollar futures are down ½% this morning after yesterday’s data continues to paint the US horizon red. May’s Producer Price Index came in at 1.8%, a quarter less than the previous reading, and economic optimism is down 5 points to 53.2, this month. The Redbook index contracted by 2.6% MoM, and yields on 3-yr T-bonds are down to 1.86%. On the sidelines, CNN yesterday reported that homelessness in Los Angeles was up a stunning 16% over last year – the number of homeless people in the city’s streets now above the 150,000 mark.
Oil is down 2% this morning as demand outlooks drop, the API reports a 4.85-million-barrel increase in reserves, and UAE Energy Minister Suhail bin Mohammed al-Mazroui says a production cut agreement is close to completion. Gold enters its 2nd day of gain this morning as the dollar drops on dastardly data. And Bitcoin continues to attempt breaking the 8,000 mark as Coinbase launches its debit card in 6 more European countries, enabling them to make purchases through any vendor that accepts Visa.
|08:15 AM GMT – EU||ECB’s President Draghi speech, VP De Guindos at 09:00, and Benoît Cœuré at 15:00|
|11:00 AM GMT – US||MBA Mortgage Applications (Jun 7). Consumer Price Index at 12:30, and Monthly Budget Statement (May) at 18:00|
|14:30 PM GMT – OIL||EIA Crude Oil Stocks Change (Jun 7)|
|23:01 PM GMT – UK||RICS Housing Price Balance (May)|
|23:50 PM GMT – Japan||BSI Large Manufacturing Conditions Index (Q2), and Foreign Stocks & Bond Investment (Jun 7). Tertiary Industry Index at 04:30|
|00:00 GMT (+1) – Australia||Consumer Inflation Expectations (Jun). Participation Rate (May) at 0:30, and (Un)Employment (May) at 01:30|
|ND – China||Money Supply, New Loans, and Foreign Direct Investment (May)|
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