Market briefing: UK markets closed in positive territory yesterday, led by a rally in financial and commodity sector stocks
Date
5/26/2016 7:41:31 AM
(MENAFN- ProactiveInvestors - UK) Proactive Investors, 08:57
Market Daily - 26 May 2016
UK Market Snapshot
UK markets closed in positive territory yesterday, led by a rally in financial and commodity sector stocks. Barclays, HSBC Holdings and Royal Bank of Scotland Group climbed 2.4%, 2.8% and 4.4%, respectively, after Greece reached a deal with its creditors to unlock 10.3 billion in bailout funds. Oil firms, Royal Dutch Shell and BP rose 1.8% and 2.3%, respectively, tracking gains in crude oil prices. Serco Group soared 12.4%, as it expected that its underlying trading profit for 2016 would surpass market expectations. On the contrary, Marks & Spencer Group tanked 10.2%, after it reported a significant decline in its pre-tax earnings and issued a profit warning for the current year. Stagecoach Group lost 1.7%, after a leading broker downgraded its rating on the stock to 'Neutral' from Overweight'. The FTSE 100 advanced 0.7%, to close at 6,262.9, while the FTSE 250 rose 0.6%, to settle at 17,232.6.
US Market Snapshot
US markets closed in the green yesterday, helped by a rally in energy and materials firms amid a rise in crude oil prices. Southwestern Energy, Chesapeake Energy and Transocean surged 6.8%, 7.4% and 9.7%, respectively. LyondellBasel Industries and Freeport-McMoRan edged 2.8% and 4.9% up, respectively. Hewlett Packard Enterprise jumped 6.8%, after it announced that it would spin off and merge its enterprise services unit with Computer Sciences Corp., up 42.1%, in a deal worth $8.5 billion. Microsoft advanced 1.0%, on the back of news that it would lay off 1,850 jobs at its struggling smartphone unit. On the losing side, Alibaba Group Holding dropped 6.8%, after it revealed that its accounting practices are being probed by the US SEC. The S & P 500 gained 0.7%, to settle at 2,090.5. The DJIA rose 0.8%, to settle at 17,851.5, while the NASDAQ advanced 0.7%, to close at 4,894.9.
Europe Market Snapshot
Other European markets ended higher yesterday, amid gains in crude oil prices and after debt-laden Greece secured a deal with its creditors to unlock fresh funds. Meanwhile, Germany's Ifo business climate index rose more than expected in May. Banks, Deutsche Bank, CaixaBank, Unione di Banche Italiane and Banco Popular Espanol rose 3.7%, 6.3%, 7.2% and 7.5%, respectively. Energy producers, SUBSea 7, Eni and Repsol advanced 2.8%, 3.5% and 3.7%, respectively, as crude oil prices jumped. Novo Nordisk gained 3.5%, after its new diabetes drug received support from the US Food and Drug Administration's advisory panel. Peugeot added 2.6%, on the back of news that the French Government was mulling selling part or its entire stake in the company. The FTSEurofirst 300 index gained 1.3%, to close at 1,366.8. Among other European markets, the German DAX Xetra 30 rose 1.5%, to close at 10,205.2, while the French CAC-40 advanced 1.1%, to settle at 4,481.6.
Asia Market Snapshot
Markets in Asia are trading mostly lower this morning. In Japan, pharma companies, Takeda Pharmaceutical, Shionogi & Co and Aska Pharmaceutical have gained 2.6%, 3.4% and 5.0%, respectively. Haseko has advanced 5.0%, following a broker upgrade to 'Buy' from 'Outperform'. Energy sector stocks, JX Holdings and Inpex have climbed 1.7% and 3.0%, respectively, as crude oil prices jumped and reached $50.0 per barrel mark. In Hong Kong, airline firms, China Eastern Airlines and China Southern Airlines have slid 2.3% and 3.4%, respectively, amid concerns over higher crude oil prices. In South Korea, POSCO and Lotte Shopping have declined 0.5% and 1.3%, respectively. The Nikkei 225 index is trading 0.3% higher at 16,805.6. The Hang Seng index is trading 0.2% down at 20,326.3, while the Kospi index is trading 0.1% lower at 1,959.3.
Commodity, Currency and Fixed Income Snapshots
Crude Oil
At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.66% or $0.33 higher at $50.07 per barrel, reaching its highest level for the first time in six months. Yesterday, the contract climbed 2.32% or $1.13, to settle at $49.74 per barrel, after the Energy Information Administration disclosed that US crude inventories declined more than expected by 4.2 million barrels to 537.1 million barrels in the week ended 20 May 2016.
Gold
At 0330GMT today, Gold futures contract is trading 0.67% or $8.20 higher at $1232.00 per ounce. Yesterday, the contract declined 0.44% or $5.40, to settle at $1223.80 per ounce, slipping to seven-week lows, as growing expectations of a rate hike by the US Federal Reserve weighed on the safe haven metal.
Currency
At 0330GMT today, the EUR is trading 0.24% higher against the USD at $1.1182. Investors will look forward to the US durable goods orders data for April, set to release later in the day. Yesterday, the EUR strengthened 0.13% versus the USD, to close at $1.1155, following upbeat data on Germany's Ifo business climate and current assessment indices for May.
At 0330GMT today, the GBP is trading 0.11% higher against the USD at $1.4713, ahead of the second estimate of the UK GDP growth for the first quarter, due to release in a few hours. Yesterday, the GBP strengthened 0.42% versus the USD, to close at $1.4697, extending its gains from previous session.
Fixed Income
In the US, long term treasury prices fell and pushed yields slightly higher, amid a rally in global equity markets. Yesterday, yield on 10-year notes rose 1 basis point to 1.87%, while yield on 2-year notes remained flat at 0.92%. Meanwhile, 30-year bond yield rose 2 basis points to 2.67%.
Key Economic News
German consumer confidence index rose unexpectedly in June
In June, the consumer confidence index rose unexpectedly to 9.80 in Germany, higher than market expectations of an unchanged reading. The consumer confidence index had recorded a reading of 9.70 in the previous month.
German Ifo business expectations index recorded a rise in May
The Ifo business expectations index in Germany rose to a level of 101.60 in May, compared to a revised reading of 100.50 in the prior month. Market anticipation was for the Ifo business expectations index to advance to a level of 100.80.
German Ifo current assessment index advanced in May
Compared to a reading of 113.20 in the previous month the Ifo current assessment index rose to a level of 114.20 in May, in Germany. Markets were expecting the Ifo current assessment index to rise to 113.30.
German Ifo business climate index rose in May
In May, the Ifo business climate index in Germany recorded a rise to 107.70, compared to market expectations of a rise to 106.80. The Ifo business climate index had registered a reading of 106.60 in the prior month.
Italian trade surplus fell in April
(non-EU countries) trade surplus in Italy fell to 3.60 billion in April, compared to a revised trade surplus of 4.03 billion in the previous month.
Italian industrial sales eased in March
The seasonally adjusted industrial sales registered a drop of 1.60% in Italy on a MoM basis, in March. In the prior month, industrial sales had advanced 0.10%.
Italian industrial orders climbed in March
The non-seasonally adjusted industrial orders rose 0.10% on a YoY basis in Italy, in March. In the prior month, industrial orders had climbed 3.80%.
Italian industrial sales recorded a drop in March
In Italy, the non-seasonally adjusted industrial sales recorded a drop of 3.60% in March on a YoY basis. Industrial sales had recorded a drop of 0.20% in the previous month.
Italian industrial orders recorded a drop in March
The seasonally adjusted industrial orders in Italy eased 3.30% in March on a monthly basis. In the prior month, industrial orders had recorded a rise of 0.70%.
Spanish PPI declined in April
The producer price index (PPI) in Spain eased 6.10% in April on an annual basis. In the previous month, the PPI had registered a revised drop of 5.60%.
Spanish PPI fell in April
In Spain, the PPI fell 0.10% in April on a MoM basis. In the previous month, the PPI had advanced by a revised 0.60%.
Swiss UBS consumption indicator climbed in April
In April, UBS consumption indicator in Switzerland registered a rise to 1.47. UBS consumption indicator had registered a revised reading of 1.40 in the prior month.
Swiss economic expectations index registered a rise in May
The economic expectations index in Switzerland advanced to 17.50 in May. The economic expectations index had recorded a level of 11.50 in the prior month.
US Markit composite PMI dropped in May
In May, the flash Markit composite PMI fell to a level of 50.80 in the US. In the prior month, Markit composite PMI had registered a level of 52.40.
US house price purchase index recorded a rise in 1Q 2016
In the US, the house price purchase index rose 1.30% on a QoQ basis, in 1Q 2016. The house price purchase index had registered a revised rise of 1.50% in the prior quarter.
US housing price index advanced more than expected in March
On a monthly basis, the housing price index in the US climbed 0.70% in March, more than market expectations for an advance of 0.50%. The housing price index had climbed by a revised 0.50% in the prior month.
US mortgage applications advanced in the last week
In the week ended 20 May 2016, on a weekly basis, mortgage applications rose 2.30% in the US. Mortgage applications had recorded a revised drop of 1.00% in the prior week.
US Markit services PMI dropped unexpectedly in May
In May, the preliminary Markit services PMI in the US eased unexpectedly to a level of 51.20, compared to a reading of 52.80 in the prior month. Market anticipation was for Markit services PMI to rise to 53.00.
Bank of Canada left interest rate unchanged at 0.5%
The Bank of Canada (BoC) held benchmark interest rate steady at 0.5%, as widely expected, and indicated that Canada's first quarter growth appears to be in line with its April forecast. Further, the BoC stated that, the nation's second quarter growth will be much weaker than predicted because of the devastating Alberta wildfires and indicated that the destruction will cut 1.25 percentage points off the real GDP growth in the second quarter. However, the Canadian economy is expected to rebound in the third quarter as oil production resumes and reconstruction of the areas devastated by the fire begins.
Japanese investors turned net buyers of foreign stocks in the previous week
Japanese investors turned net buyers of 182.30 billion worth of foreign stocks in the week ended 20 May 2016, as compared to being net sellers of 152.10 billion worth of foreign stocks in the prior week.
Japanese investors remained net buyers of foreign bonds in the previous week
Japanese investors were net buyers of 684.00 billion worth of foreign bonds in the week ended 20 May 2016, as compared to being net buyers of a revised 1122.70 billion worth of foreign bonds in the previous week.
Foreign investors remained net buyers of Japanese bonds in the previous week
Foreign investors remained net buyers of 492.00 billion worth of Japanese bonds in the week ended 20 May 2016, as compared to being net buyers of 348.40 billion worth of Japanese bonds in the previous week.
Foreign investors remained net buyers of Japanese stocks in the previous week
Foreign investors remained net buyers of 40.40 billion worth of Japanese stocks in the week ended 20 May 2016, as compared to being net buyers of a revised 72.50 billion worth of Japanese stocks in the prior week.
Japanese corporate service price index rose as expected in April
On a YoY basis, in April, the corporate service price index rose 0.20% in Japan, in line with market expectations. The corporate service price index had registered a similar rise in the previous month.
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