Market briefing: UK markets finished higher yesterday, with the FTSE 100 index rebounding from its four-day decline, amid gains in mining sector shares

2016-06-19 07:57:00

(MENAFN- ProactiveInvestors - UK) Proactive Investors, Thu

UK Market Snapshot
UK markets finished higher yesterday, with the FTSE 100 index rebounding from its four-day decline, amid gains in mining sector shares. Rio Tinto, Anglo American, Antofagasta and Glencore climbed 3.9%, 5.3%, 6.4% and 6.5%, respectively. Jimmy Choo soared 13.8%, after it stated that growth is on track and brand awareness is rising particularly in mainland China. The stock also received a boost after a broker upgraded its rating on its shares to ''Buy'' from ''Hold''. Banks, Barclays, Lloyds Banking Group and Royal Bank of Scotland Group gained 0.6%, 1.3% and 2.4%, respectively. On the downside, Aveva Group sank 12.1%, after Schneider Electric terminated merger talks with the company for the second time. Berkeley Group Holdings shed 1.2%, after it reported a drop in its fiscal 2016 pre-tax earnings and stated that reservations had plunged 20.0% in the five months to May amid uncertainty over Brexit. The FTSE 100 advanced 0.7%, to close at 5,966.8, while the FTSE 250 rose 0.4%, to settle at 16,298.3.
US Market Snapshot
US markets closed lower yesterday, after data showed that the US industrial production fell more than expected in May, thus casting doubts about recovery in the US economy. Bob Evans Farms plummeted 9.1%, after it presented a weaker financial outlook for the fiscal year 2017. Whole Foods Market lost 4.9%, after the US FDA gave it time till June end to fix ''serious violations'' discovered by the regulators at its Massachusetts plant. Cisco Systems slid 1.1%, following a broker downgrade on its shares to ''Neutral'' from ''Buy''. Celgene eased 1.0%, despite disclosing plans of a new $3.0 billion share buyback programme. Bucking the trend, Abercrombie & Fitch rose 2.8%, after a broker upgraded its rating on the stock to ''Hold'' from ''Sell''. The S & P 500 slipped 0.2%, to settle at 2,071.5. The DJIA shed 0.2%, to settle at 17,640.2, while the NASDAQ slid 0.2%, to close at 4,834.9.
Europe Market Snapshot
Other European markets ended in positive territory yesterday, buoyed by a rally in miners and retailers. Imerys, Boliden and ArcelorMittal rose 1.4%, 3.7% and 4.4%, respectively. Zodiac Aerospace rallied 11.6%, on speculation that Safran, up 0.8%, was preparing a takeover bid for the company and after it reaffirmed its financial outlook for the full year. Industria de Diseno Textil advanced 5.5%, after it posted upbeat profit in the first quarter amid an increase in online shopping. Schneider Electric edged 2.1% up, as its merger talks with UK''s Aveva Group ended without a deal. Luxottica Group added 2.0%, after a leading broker recommended buying its stocks. ALSO Holding gained 0.9%, after it agreed to a strategic partnership with Logicom for cloud-based software services. The FTSEurofirst 300 index gained 0.9%, to close at 1,271.5. Among other European markets, the German DAX Xetra 30 rose 0.9%, to close at 9,606.7, while the French CAC-40 advanced 1.0%, to settle at 4,171.6.
Asia Market Snapshot
Markets in Asia are trading weaker this morning, mirroring overnight losses on Wall Street. In Japan, auto exporters, Toyota Motor, Nissan Motor and Isuzu Motors have dropped 2.2%, 3.0% and 3.2%, respectively, as the Japanese Yen surged against the US Dollar after the Bank of Japan kept its monetary policy unchanged as widely expected. Oil companies, Inpex and Japan Petroleum Exploration have fallen 1.1% and 2.2%, respectively, tracking losses in crude oil prices. In Hong Kong, real estate firms, Cheung Kong Property Holdings and China Vanke have slid 2.2% each. In South Korea, index majors, Hyundai Motor and POSCO have declined 1.1% and 1.2%, respectively. The Nikkei 225 index is trading 1.1% lower at 15,744.8. The Hang Seng index is trading 1.9% down at 20,081.8, while the Kospi index is trading 0.6% lower at 1,956.9.

Commodity, Currency and Fixed Income Snapshots
Crude Oil
At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.63% or $0.31 lower at $48.66 per barrel. Yesterday, the contract declined 1.73% or $0.86, to settle at $48.97 per barrel, amid demand concerns for the commodity following dismal US industrial production data for May. Meanwhile, the Energy Information Administration reported that US crude stockpiles dropped less than expected by 933,000 barrels in the week ended 10 June 2016.
Gold
At 0330GMT today, Gold futures contract is trading 1.26% or $16.20 higher at $1302.00 per ounce, breaching the psychologically important $1,300 per ounce handle. Yesterday, the contract marginally advanced or $0.20, to settle at $1285.80 per ounce, extending its recent gains, after the US Fed left interest rates unchanged at its latest monetary policy meeting.
Currency
At 0330GMT today, the EUR is trading 0.05% higher against the USD at $1.1266, ahead of the Euro-zone consumer price index for May, due to release today. Market participants will also keep an eye on the US inflation figures for May, set to release later in the day. Yesterday, the EUR strengthened 0.47% versus the USD, to close at $1.1260, after the Euro-zone trade surplus unexpectedly widened in April. The US Dollar lost ground after the US Fed did not provide any clue about the timing of next rate hike.
At 0330GMT today, the GBP is trading 0.15% lower against the USD at $1.4183, ahead of the Bank of England''s interest rate decision, slated for today. Also, the UK retail sales data for May will be closely monitored by investors. Yesterday, the GBP strengthened 0.64% versus the USD, to close at $1.4204, following better than expected reports on jobs market in the UK.
Fixed Income
In the US, long term treasury prices rose and pushed yields lower, after the US Fed policy members kept interest rates steady and offered a dovish stance about future rate hikes. Yesterday, yield on 10-year notes fell 2 basis points to 1.60%, while yield on 2-year notes lost 5 basis points to 0.69%. Meanwhile, 30-year bond yield remained flat at 2.43%.

Key Economic News
UK ILO unemployment rate slid unexpectedly in the February-April 2016 period
In the February-April 2016 period, the ILO unemployment rate in the UK recorded an unexpected drop to 5.00%, lower than market expectations of an unchanged reading. In the January-March 2016 period, the ILO unemployment rate reported a rate of 5.10%.
UK average earnings including bonus rose more than expected in the February-April 2016 period
In the UK, the average earnings including bonus climbed 2.00% in the February-April 2016 period on a YoY basis, compared to a similar rise in the January-March 2016 period. Market expectation was for the average earnings including bonus to climb 1.70%.
Employment in the UK climbed in the February-April 2016 period
In the UK, employment registered a rise of 55.00 K in the February-April 2016 period, compared to market anticipations of an advance of 60.00 K. Employment had registered an increase of 44.00 K in the January-March 2016 period.
UK claimant count rate steadied in May
In the UK, the claimant count rate remained flat at 2.20% in May, compared to market expectations of a fall to 2.10%.
UK average earnings excluding bonus advanced more than expected in the February-April 2016 period
On an annual basis, in the February-April 2016 period, the average earnings excluding bonus advanced 2.30% in the UK, more than market expectations for an advance of 2.00%. In the January-March 2016 period, the average earnings excluding bonus had registered a revised rise of 2.20%.
Number of unemployment benefits claimants in the UK surprisingly eased in May
Number of unemployment benefits claimants in the UK dropped unexpectedly by 0.40 K in May, more than market expectations of a decline of 0.00 K. Number of unemployment benefits claimants had registered a revised increase of 6.40 K in the previous month.
Euro-zone trade surplus narrowed in April
The non-seasonally adjusted trade surplus in the Euro-zone narrowed to 27.50 billion in April, compared to a trade surplus of 28.60 billion in the previous month. Markets were anticipating the region''s a trade surplus to narrow to 26.00 billion.
Euro-zone trade surplus expanded in April
The seasonally adjusted trade surplus in the Euro-zone widened to 28.00 billion in April, compared to market expectations of a trade surplus of 21.50 billion. The Euro-zone had registered a revised trade surplus of 23.70 billion in the prior month.
French CPI (ex-tobacco) rose as expected in May
The final consumer price index (ex-tobacco) in France rose 0.40% on a MoM basis in May, compared to an advance of 0.10% in the prior month. Market expectation was for the CPI (ex-tobacco) to rise 0.40%. The preliminary figures had also recorded an advance of 0.40%.
French EU normalised CPI rose more than expected in May
On a MoM basis, the final EU normalised CPI advanced 0.50% in May, in France, higher than market expectations for an advance of 0.30%. The preliminary figures had recorded a rise of 0.30%. In the previous month, EU normalised CPI had risen 0.10%.
Fed left interest rate unchanged; no hint on timing of next hike
The Federal Open Market Committee (FOMC) unanimously voted to keep the benchmark interest rate unchanged, in light of an uncertain job market. The US Fed signaled to raise rates twice in 2016, but did not mention about when its next rate hike might occur. Further, the Fed Chairwoman, Janet Yellen, indicated that Britain''s June 23 referendum decision would pose consequences for economic and financial conditions in global financial markets. The central bank also stated that the economy would grow only 2% this year and in 2017, 0.1 percentage point lower than previously forecasted for each year.
US producer price (ex-food & energy) rose more than expected in May
On an annual basis in May, producer price (ex-food & energy) recorded a rise of 1.20% in the US, compared to a rise of 0.90% in the prior month. Market anticipation was for producer price (ex-food & energy) to advance 1.00%.
US capacity utilisation recorded a decline in May
Compared to a revised reading of 75.30% in the previous month capacity utilisation registered a drop to 74.90% in May, in the US. Market expectation was for capacity utilisation to ease to a level of 75.20%.
US producer price (ex-food & energy) advanced more than expected in May
On a monthly basis, in May, producer price (ex-food & energy) advanced 0.30% in the US, higher than market expectations for an advance of 0.10%. In the prior month, producer price (ex-food & energy) had registered a rise of 0.10%.
US industrial production fell more than expected in May
In May, on a monthly basis, industrial production dropped 0.40% in the US, compared to a revised advance of 0.60% in the previous month. Markets were anticipating industrial production to fall 0.20%.
US Total net TIC flows climbed in April
In the US, total net TIC flows advanced to $80.40 billion in April. Total net TIC flows had recorded a revised reading of $98.10 billion in the previous month.
US manufacturing production declined more than expected in May
In May, on a monthly basis, manufacturing production dropped 0.40% in the US, higher than market expectations for a fall of 0.10%. In the previous month, manufacturing production had advanced by a revised 0.20%.
US net treasury international capital (TIC) long term purchases dropped in April
Net treasury international capital (TIC) long term purchases eased to $79.60 billion in April, in the US. Net treasury international capital (TIC) long term purchases had recorded a reading of $78.10 billion in the prior month.
US producer price advanced more than expected in May
Producer price in the US climbed 0.40% in May on a monthly basis, compared to an advance of 0.20% in the previous month. Market expectation was for producer price to climb 0.30%.
US mortgage applications slid in the last week
Mortgage applications recorded a drop of 2.40% in the US on a weekly basis, in the week ended 10 June 2016. Mortgage applications had recorded a rise of 9.30% in the prior week.
US NY Empire State manufacturing index advanced in June
In the US, the NY Empire State manufacturing index rose to a level of 6.01 in June, compared to a reading of -9.02 in the previous month. Markets were expecting the NY Empire State manufacturing index to advance to -4.25.
US producer price fell as expected in May
In May, producer price slid 0.10% in the US on an annual basis, compared to a flat reading in the previous month. Markets were expecting producer price to fall 0.10%.
Canadian manufacturing shipments advanced more than expected in April
Manufacturing shipments in Canada advanced 1.00% in April on a MoM basis, compared to a fall of 0.90% in the previous month. Market expectation was for manufacturing shipments to climb 0.60%.
Canadian existing home sales registered a drop in May
On a monthly basis, existing home sales slid 2.80% in Canada, in May. Existing home sales had climbed 3.10% in the previous month.
BoJ kept benchmark interest rate unchanged
The Bank of Japan (BoJ) held the key interest rate at -0.10% and maintained its massive stimulus programme intact at 80 trillion, as the policymakers opted to continue to gauge the economic impact of their negative-rate policy.
Foreign investors turned net buyers of Japanese stocks in the previous week
Foreign investors turned net buyers of 128.30 billion worth of Japanese stocks in the week ended 10 June 2016, from being net sellers of a revised 97.50 billion worth of Japanese stocks in the previous week.
Japanese investors remained net buyers of foreign bonds in the previous week
Japanese investors remained net buyers of 867.80 billion worth of foreign bonds in the week ended 10 June 2016, from being net buyers of a revised 894.00 billion worth of foreign bonds in the previous week.
Japanese investors remained net buyers of foreign stocks in the previous week
Japanese investors remained net buyers of 129.60 billion worth of foreign stocks in the week ended 10 June 2016, from being net buyers of 35.20 billion worth of foreign stocks in the prior week.
Japanese machine tool orders dropped in May
The final machine tool orders in Japan registered a drop of 24.70% in May, on a YoY basis. In the previous month, machine tool orders had registered a drop of 26.30%. The preliminary figures had recorded a drop of 25.00%.
Foreign investors became net buyers of Japanese bonds in the previous week
Foreign investors were net buyers of 764.30 billion worth of Japanese bonds in the week ended 10 June 2016, as compared to being net buyers of 611.00 billion worth of Japanese bonds in the previous week.
Japanese Tokyo condominium sales fell in May
Tokyo condominium sales in Japan registered a drop of 14.10% on an annual basis, in May. Tokyo condominium sales had registered a drop of 13.50% in the previous month.
Chinese aggregate financing declined surprisingly in May
In May, aggregate financing eased unexpectedly to CNY 659.90 billion in China, compared to market expectations of a rise to a level of CNY 1000.00 billion. Aggregate financing had registered a level of CNY 751.00 billion in the previous month.
Chinese M0 money supply rose more than expected in May
M0 money supply in China recorded a rise of 6.30% on a YoY basis in May, higher than market expectations for an advance of 5.60%. In the previous month, M0 money supply had climbed 6.00%.
Chinese new Yuan loans rose in May
In May, new Yuan loans rose to a level of CNY 985.50 billion in China, higher than market expectations of a rise to a level of CNY 750.00 billion. In the previous month, new Yuan loans had registered a level of CNY 555.60 billion.
Chinese M2 money supply advanced less than expected in May
On a YoY basis, M2 money supply in China recorded a rise of 11.80% in May, lower than market expectations for a rise of 12.50%. In the previous month, M2 money supply had advanced 12.80%.
Chinese M1 money supply advanced more than expected in May
In China, M1 money supply climbed 23.70% on an annual basis in May, compared to an advance of 22.90% in the previous month. Markets were expecting M1 money supply to rise 21.90%.

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