Pre market briefing: losses in banking stocks amid concerns over slowing global economic growth
Date
2/10/2016 7:06:02 AM
(MENAFN- ProactiveInvestors - UK) Proactive Investors 08:17
UK Market Snapshot
UK markets finished lower yesterday with the FTSE 100 index falling to its lowest level since November 2012 amid a rout in mining banking and oil firms. Miners BHP Billiton Glencore Antofagasta and Anglo American plunged 5.9% 8.1% 9.4% and 11.3% respectively. Banks HSBC Holdings Royal Bank of Scotland Group Barclays and Standard Chartered lost 1.4% 2.2% 4.7% and 5.6% respectively. Oil companies BG Group BP and Royal Dutch Shell dropped 2.5% 2.8% and 4.0% respectively following losses in crude oil prices. TUI shed 1.4% after it posted a wider net loss for the first quarter compared to the same period last year. On the upside WPP advanced 3.4% after its US-based competitor Omnicom Group reported better than expected earnings for the fourth quarter. The FTSE 100 declined 1.0% to close at 5632.2 while the FTSE 250 fell 1.2% to settle at 15316.9.
US Market Snapshot
US markets closed lower yesterday as energy and technology sector stocks dropped. Chevron Southwestern Energy ONEOK and CONSOL Energy fell 3.6% 10.4% 10.9% and 11.9% respectively tracking a decline in crude oil prices. Alphabet Oracle and International Business Machines slid 0.5% 1.5% and 2.3% respectively. Twenty-First Century Fox dropped 1.9% after it reported a fall in its second quarter revenue and cut its full-year outlook amid lower movie sales. Bucking the trend Martin Marietta Materials soared 9.4% after it projected a rise in its materials shipments. Coca-Cola advanced 1.5% as it reported better than expected revenue for the fourth quarter. CVS Health added 1.0% after its fourth quarter result was in line with market expectations. The S&P 500 slipped 0.1% to settle at 1852.2. The DJIA shed 0.1% to settle at 16014.4 while the NASDAQ declined 0.3% to close at 4268.8.
Europe Market Snapshot
Other European markets closed in the red yesterday led by losses in banking stocks amid concerns over slowing global economic growth. Credit Suisse Group plummeted 8.4% after stating that it might cut its negative deposit rate further. Swedbank declined 5.7% as its Chief Executive Officer Michael Wolf was asked to step down from his position. Deutsche Bank fell 1.5% reversing its earlier gains despite its co-CEO John Cryan soothing investors concern by stating that its condition is 'rock solid'. Peers UniCredit and Eurobank Ergasia tumbled 7.9% and 12.1% respectively. On the brighter side Svenska Handelsbanken rose 1.6% after it reported a considerable increase in its fourth quarter earnings and raised its dividend payout. The FTSEurofirst 300 index declined 1.6% to close at 1219.8. Among other European markets the German DAX Xetra 30 slid 1.1% to close at 8879.4 while the French CAC-40 lost 1.7% to settle at 3997.5.
Asia Market Snapshot
Markets in Asia are trading weaker this morning. In Japan Sharp has fallen 6.1% as it is contemplating takeover offers from Foxconn and Innovation Network Corp. of Japan. Export-oriented companies Honda Motor Nissan Motor and Sony have declined 0.7% 1.0% and 2.6% respectively amid a strong Japanese Yen. Oil firms Inpex and JX Holdings have shed 2.2% and 3.2% respectively. On the flipside Yamaha Motor has gained 3.9% after a top broker reiterated its 'Buy' rating on the share and expected that its fiscal 2016 earnings would go up. Markets in Hong Kong and South Korea are closed today on account of Lunar New Year Holidays. The Nikkei 225 index is trading 3.4% lower at 15541.2.
Commodity Currency and Fixed Income Snapshots
Crude Oil
At 0430GMT today Brent Crude Oil one month futures contract is trading 2.14% or $0.65 higher at $30.97 per barrel ahead of the Energy Information Administration weekly oil inventory data scheduled to be released later today. Yesterday the contract declined 7.79% or $2.56 to settle at $30.32 per barrel after the International Energy Agency warned in its monthly report that crude oil prices would drop further in the coming time as global oversupply worsened in January. Adding to the negative sentiment the American Petroleum Institute reported a rise of 2.4 million barrels in the US crude inventories for the week ended 05 February 2016.
Gold
At 0430GMT today Gold futures contract is trading 0.54% or $6.50 lower at $1192.20 per ounce. Yesterday the contract advanced 0.07% or $0.80 to settle at $1198.70 per ounce as a sell-off in global equity markets continued.
Currency
At 0430GMT today the EUR is trading a tad lower against the USD at $1.1291. Market participants would look forward to the US Fed Chairwoman Janet Yellen's speech scheduled to take place later in the day. Yesterday the EUR strengthened 0.93% versus the USD to close at $1.1294 extending its gains from previous session.
At 0430GMT today the GBP is trading marginally higher against the USD at $1.4465 ahead of the UK industrial and manufacturing production data for December scheduled to release in a few hours. Investors would also closely monitor the UK NIESR GDP estimate for three months ended January due for release later today. Yesterday the GBP strengthened 0.22% versus the USD to close at $1.4460 after the nation's total trade deficit narrowed in December.
Fixed Income
In the US long term treasury prices rose and pushed yields slightly lower amid a fall in the US stock markets. Yesterday yield on 10-year notes fell 1 basis point to 1.74% while yield on 2-year notes gained 3 basis points to 0.69%. Meanwhile 30-year bond yield fell 1 basis point to 2.55%.
Key Economic News
UK trade deficit fell in December
Non-EU trade deficit in the UK fell to 2.36 billion in December from a revised trade deficit of 3.54 billion in the prior month. Markets were expecting the nation's trade deficit to fall to 2.50 billion.
UK total trade deficit declined in December
In December total trade deficit in the UK fell to 2.71 billion from a revised total trade deficit of 4.03 billion in the previous month. Market expectation was for the country's total trade deficit to drop to 3.00 billion.
UK visible trade deficit fell in December
Visible trade deficit in the UK narrowed to 9.92 billion in December following a revised visible trade deficit of 11.50 billion in the prior month. Markets were anticipating the nation's visible trade deficit to drop to 10.40 billion.
German trade surplus narrowed in December
Germany has registered the seasonally adjusted trade surplus of 18.80 billion in December from a revised trade surplus of 20.50 billion in the previous month. Market anticipation was for a trade surplus of 20.00 billion.
German exports recorded an unexpected drop in December
On a MoM basis the seasonally adjusted exports registered an unexpected drop of 1.60% in December in Germany compared to a revised rise of 0.50% in the previous month. Markets were anticipating exports to climb 0.50%.
German imports declined more than expected in December
The seasonally adjusted imports dropped 1.60% on a MoM basis in Germany in December compared to a revised advance of 1.30% in the previous month. Markets were expecting imports to ease 0.50%.
German current account surplus widened in December
The non-seasonally adjusted current account surplus in Germany rose to 25.60 billion in December compared to a revised current account surplus of 24.30 billion in the prior month. Markets were expecting the country's current account surplus to expand to 26.70 billion.
German industrial production surprisingly eased in December
The seasonally adjusted industrial production unexpectedly eased 1.20% on a MoM basis in Germany in December compared to a revised drop of 0.10% in the prior month. Market anticipation was for industrial production to rise 0.50%.
German industrial production declined more than expected in December
On a YoY basis the non-seasonally & working day adjusted industrial production in Germany eased 2.20% in December higher than market expectations for a fall of 0.60%. In the previous month industrial production had recorded a rise of 0.10%.
French budget deficit narrowed in December
Budget deficit in France narrowed to 70.50 billion in December. France had posted a budget deficit of 82.80 billion in the previous month.
Swiss unemployment rate remained unchanged in January
The seasonally adjusted unemployment rate in Switzerland remained unchanged at a level of 3.40% in January. Markets were anticipating unemployment rate to climb to a level of 3.50%.
Swiss unemployment rate rose in January
In January the non-seasonally adjusted unemployment rate in Switzerland advanced to 3.80% in line with market expectations. Unemployment rate had registered a reading of 3.70% in the previous month.
US Redbook index registered a drop in the last week
The seasonally adjusted Redbook index in the US slid 2.60% on a monthly basis in the week ended 05 February 2016. The Redbook index had registered a drop of 1.50% in the prior week.
US JOLTs job openings advanced in December
JOLTs job openings advanced to 5607.00 K in December in the US higher than market expectations of an advance to a level of 5413.00 K. In the prior month JOLTs job openings had recorded a revised level of 5346.00 K.
US wholesale inventories fell less than expected in December
In December on a MoM basis the seasonally adjusted wholesale inventories fell 0.10% in the US less than market expectations for a drop of 0.20%. The wholesale inventories had recorded a revised drop of 0.40% in the prior month.
US small business optimism index declined in January
In January the small business optimism index eased to 93.90 in the US compared to market expectations of a drop to 94.50. In the previous month the small business optimism index had recorded a reading of 95.20.
US Redbook index advanced in the last week
On an annual basis the Redbook index rose 0.60% in the week ended 05 February 2016 in the US. In the prior week the Redbook index had recorded a rise of 0.80%.
Japanese housing loans advanced in 4Q 2015
In Japan housing loans rose 2.20% on an annual basis in 4Q 2015. Housing loans had recorded a rise of 2.40% in the prior quarter.
Japanese domestic corporate goods price index fell more than expected in January
In January on a YoY basis the domestic corporate goods price index dropped 3.10% in Japan higher than market expectations for a drop of 2.80%. In the prior month the domestic corporate goods price index had recorded a revised drop of 3.50%.
Japanese domestic corporate goods price index decline more than forecast last month
In January the domestic corporate goods price index dropped 0.90% in Japan on a MoM basis compared to a revised fall of 0.40% in the previous month. Markets were anticipating the domestic corporate goods price index to ease 0.70%.
Japanese machine tool orders registered a drop in January
On a YoY basis the preliminary machine tool orders in Japan registered a drop of 17.20% in January. In the prior month machine tool orders had dropped 25.70%.
Japanese average office vacancies in Tokyo recorded a rise in January
On a monthly basis average office vacancies in Tokyo advanced 4.01% in Japan. In the prior month average office vacancies in Tokyo had recorded a rise of 4.03%.