Asian equity markets have started the new week lower, following on from Wall Street’s lower close on Friday. Worries continue to abound about the recent spate of macro data and what it means for the global outlook. While there was little out of consequence overnight, a fall in machine orders in Japan and a surprisingly weak set of new loan data in China has done little to reassure confidence. The impasse ahead of the 23-24th June EU summit which is supposed to agree a second bailout of the Greek economy continues, with the ECB and the German government taking opposing sides on the requirement that private creditors will be involved in the new package.
Futures this morning are suggesting a tentative rise on European markets this morning, though without much conviction. The euro is worth around $1.4353, having fallen by over 1.5 cents on Friday as investor’s limited exposure ahead of the weekend in a risk-off environment. Euro-sterling is around 88.4 pence.
There’s virtually no data out today to steer expectations. This evening MPC member Martin Weale is speaking to Finance Directors in a speech that may shed some light on how he is viewing the latest crop of weak UK data. The rest of the week is fairly busy in the UK. Tomorrow has consumer price inflation, which may show a small pull-back in the annual rate, as some of the large pre-Easter price hikes are reversed. Wednesday’s labour market data shouldn’t be too newsworthy, with the claimant count remaining around 4.6%, though there could be a drop in the ILO rate to 7.6%. The May retail sales report on Thursday could be very weak, reversing the jump in April which was a reflection of the Easter/royal wedding break. Wednesday also sees the Governor’s Mansion House speech at the Lord’s Mayor’s Banquet for Bankers and Merchants of the City of London. This is a big set piece speech and gives the Governor a good opportunity to spell out how he sees the world.
In the US, tomorrow’s headline retail sales are expected to fall by 0.4% in May, although that largely reflects a fall in car sales due to a squeeze on consumption from higher gasoline prices. Excluding automobiles, sales are expected to increase by 0.3%. On Wednesday inflation is set to show few signs of abating with a 0.1% increase in May enough to push the annual rate up to 3.3%, its highest level since October 2008. Consensus looks for industrial production to rise by 0.2% in May.
Posted in Daily Market News on May 30 2014