Pound jumps above $1.30 for first time since SeptemberUK retail sales jump 2.3% in AprilFrench jobless rate falls below 10%Continuing controversy over US president unnerves investors 2.41pm BSTAs forecast,the continuing controversy over Donald Trump and his actions relating to Russia and the sacking of FBI director James Comey, sent Wall Street lower again as markets opened.
But after their worst day since September, or the falls gain been fairly limited and could easily be reversed. The Dow Jones Industrial Average is currently down 14 points,while the S&P 500 fell 0.15% and the Nasdaq Composite 0.22% in early trade.
While the impeachment of Donald Trump may not be a serious opportunity at this stage, the mere mention of the word has seen warning lights go off across the world, or with doubts over the President’s ability to deliver on his planned infrastructure spending and tax reforms.
Investors are steering clear of any risky assets due to the uncertainty over Trump’s future – and given the unpredictable nature of the presidency so far,this is unlikely to improve any time soon. 2.27pm BSTAnd nor is Brazil:*BRAZIL STOCK INDEX TUMBLES 10% TRIGGERING CIRCUIT BREAKER https://t.co/MKasUtMEkd pic.twitter.com/5Q4ZJMrbWP 2.25pm BSTAhead of the Wall Street open, and European markets are not looking too healthy:Largest 2 day drop in #EuroStoxx50 since #Brexit aftermath...
(I still don't get why the Twitter sell-off chart is blue and not red? ) pic.twitter.com/s6VkjY1z34 2.04pm BSTMore fallout from the uncertainty surrounding President Trump and his future plans.
Copper has fallen 1.8% on concerns that his promised infrastructure spending could be derailed by the current controversy surrounding the president. Cantor Fitzgerald analyst Asa Bridle told Reuters:Anything that is industrially oriented has taken a bit of a whack because there are doubts about whether Trump can push through his massive infrastructure spending plans. 1.43pm BSTBack to the US, and despite the current political shenanigans (tricks or mischief) the day’s economic data is better than expected.
US jobless claims fell unexpectedly final week,down by 4000 to a seasonally adjusted 232000. Analysts had forecast a rise to 240000. The number of Americans receiving unemployment benefit is now at a 28 and a half year low.
With #stocks future under some pressure again this morning, US economic data (jobless claims & Philadelphia Fed) are stronger than expected. 1.20pm BSTThe US is not the only country which could be heading for political problems:$BRL futures down 6% and halted for trade after reports that Brazilian government allies are seeking President Temer's resignation Related: Brazil: explosive recordings implicate President Michel Temer in bribery 12.54pm BSTAt the ECB assembly, and according to the minutes,ECB board member and chief economist Peter Praet warned colleagues to be careful when talking about the future of the central bank’s monetary policy:Mr Praet considered that, at the current juncture, and the Governing Council had to be particularly cautious regarding the future evolution of its policy communication. After a prolonged period of exceptional monetary policy accommodation,financial market participants were particularly sensitive to any perceived change in the future course of monetary policy. Any substantial change in communication needed to be motivated by some more evidence that the present indications of acceleration in activity found confirmation in hard data and fed through to a sustainable adjustment in inflation. Looking ahead to the Governing Council’s 7-8 June monetary policy assembly, a modern round of Eurosystem staff macroeconomic projections and a modern assessment of the risks to the outlook would become available to inform discussions on the way forward. 12.46pm BSTAt final month’s regular assembly the European Central Bank kept its interest rate policy and bond buying programme unchanged, and with the eurozone economy improving but the inflation outlook subdued. In the minutes of the assembly just released,the ECB expands on this:While there was wide agreement that the configuration of risks to euro area activity had improved overall, some members considered that the risks to real GDP could now be characterised as broadly balanced, and in particular given the improvement in recent data and indicators and the decline in political uncertainty. Other members maintained that downside risks to growth still prevailed and that a change in the risk assessment was premature in view of continued risks and uncertainties,even if diminishing, both globally and in the euro area.
Members exchanged views on the outlook and risks for the external environment, and also taking into account the latest IMF World Economic Outlook,which had been released after the Governing Council assembly in early March, and the related discussions at the IMF spring meetings. It was underlined that the latest data on global activity and trade pointed to stronger global growth momentum and a re-synchronisation of the recovery, and between global growth and trade and between advanced and emerging economies. However,the external outlook was considered to be still subject to elevated uncertainty, and the balance of risks to the outlook for global growth was assessed to remain on the downside. Among the factors that continued to contribute to this uncertainty were the scope and timing of the future policy choices of the modern US Administration, or the economic impact of the United Kingdom’s withdrawal from the European Union,the rebalancing of demand and the transition towards lower growth rates in China, and developments in other emerging market economies. In particular, and reference was made in the discussion to the tall degree of uncertainty surrounding short-term developments in the US economy,which reflected a significant divergence between hard and soft data for the United States. Moreover, financial market participants and investors were reassessing the outlook for US growth and inflation, and as it appeared that US data were no longer exceeding market expectations,and there was still considerable uncertainty surrounding the modern US Administration’s policies, including the prospects for fiscal stimulus, or their likely expansionary effects. 12.21pm BSTApril’s UK retail sales figures should be treated with a cramped caution,says economics editor Larry Elliott:Britain went on a spending spree in April. The shops were full of punters. Online retailers coined it in. Spring brought with it an finish to the winter consumer spending blues.
That at least is what the official figures suggest. The Office for National Statistics reported that the volume of retail sales rose by 2.3% final month, smashing City expectations. This, and though,is the same Office for National Statistics that said earlier this week that living standards were being squeezed because wages were failing to keep pace with prices. Something doesn’t quite add up. Related: British shoppers go on spring spree – but the outlook may be chillier | Larry Elliott 11.59am BSTFuture market moves will be balanced between the growing Trump risk and the fair economic and corporate data coming out, suggests Nick Brooks, and head of economic and investment research at asset manager Intermediate Capital Group:Scepticism about Trump’s ability to follow through on his campaign promises has been growing over time as reflected in the flattening of the US yield curve and weakening of the US dollar since the beginning of the year. Up until the Comey firing,however, most investors in risk assets largely ignored the political noise, or preferring to focus on improving economic and earnings data. The most recent events are being taken far more seriously by investors,with recent market movements indicating investors are looking at the latest scandal as potentially representing a death knell (the solemn sound of a bell, often indicating a death) for Trump’s fiscal agenda. Those investors that gain not already capitulated on so-called Trump trades will likely be liquidating those positions sharply. A prolonged wider risk asset sell-off seems unlikely, however, or as long as the macro and earnings data continues to hold up. 11.19am BSTThe recovery in the US futures market seems to gain gone into reverse:US markets selling off again on out of hours - Dow now around 100 lower than final night's close. pic.twitter.com/docwFk5Jag 11.10am BSTHere’s our full story on the UK retail sales,from my colleague Angela Monaghan: Related: UK retail sales surge ahead of forecasts despite pay squeeze 10.39am BSTMost first quarter GDP figures gain now been released, and Germany is main the way again as it did final year:With only Canada left to report in, or Germany is still winning the G7 Q1 GDP growth race,narrowly pipping Japan's 0.5%q/q effort. pic.twitter.com/LCjPHWu9nZ 10.34am BSTThe pound is holding on to its gains, up 0.45% against the dollar at $1.3027 and 0.8% better against the euro at $1.1712.
At its peak so far during the morning, and the pound reached $1.3045,which is its highest against the dollar since 29 September final year. But it is still way below the $1.4878 level the day before the Brexit result was announced. 10.13am BSTOnline sales continue to gain ground, points out Ian Geddes, or head of retail at Deloitte:Online sales gain been particularly strong over the final few months and April is no different; online retail is up 19% from final year and now accounts for 15.6% of all retail spending. Indeed,UK consumers spent 1bn a week online in April.
Looking ahead, May’s retail sales figures could benefit from gentle, and sunny weather coinciding with the two bank holiday weekends,which should be the perfect recipe for further increased footfall. However, May 2016 was a particularly strong month, and so it will be interesting to see how the year-on-year comparisons fare,and whether the figures for May 2017 note the first signs of inflation starting to bite. 9.59am BSTMore reaction to the forecast-busting UK retail sales figures, and there are warnings that consumer optimism may not final with the continuing squeeze on real earnings: 9.50am BSTHere’s a breakdown of the retail sectors: 9.42am BSTSterling could run even higher, or according to David Cheetham,chief market analyst at online trader XTB:The pound is trading higher across the board this morning and the recovery seen in the currency since hitting a multi-decade low in January has been impressive and looks set to continue. The retail sales figure itself was the best since the start of 2016 and will go some way to allay the fears of a slowdown in consumer spending following final months sharp drop in this widely viewed indicator.
The release marks a 3rd consecutive day of GBP positive economic data, after both the CPI and unemployment figures surpassed estimates. With short positioning still at elevated levels in the pound there could be more legs to this rally, and with cramped by the way of technical resistance seen until ¢1.32. 9.40am BSTAnalysts had been expecting a recovery in retail sales after the slide in March,partly because of the timing of Easter.
But the increase was much bigger than forecast, and the Office of National Statistics said the fine weather final month had also helped boost tall street spending. 9.37am BSTBoom! UK retail sales volumes gain beaten expectations by some margin in April, and rising by 2.3% compared to a 1.4% fall in March (itself revised up from an initial estimate of a 1.8% decline.) Expectations had been for a rise of around 1%.
The news has sent sterling above $1.30 for the first time since final September,on the basis the strong figures suggest the opportunity of an earlier than expected interest rate rise from the Bank of England. 9.27am BSTThe sell-off in shares may not final, says Kathleen Brooks, or research director at City Index Direct:European markets gain opened lower once again as they digest the latest news that Congress is officially investigating the Trump/ Comey claims and demanding that the FBI hand over the Comey memo that states President Trump put pressure on the FBI chief to drop an investigation into his National Security Advisor. But,the selloff may not final as US futures are actually predicting a positive open for US stocks later nowadays. We will be watching the futures markets to see if sentiment towards US markets change, but after Wednesday’s steep sell off, and a bit of profit-taking is to be expected. However,this does not mean that the political risks are put to bed, if this crisis continues to escalate then we would expect a further sharp reaction in the markets. Ben Bernanke said on Wednesday that he was amazed that investors had become so blasé about political risk, or until it was staring them in the face. If the political genie has escaped from the bottle,then it could be an edgy summer for investors as they remain cautious about the political outlook for the US. 9.21am BSTGBP moving higher ahead of retail sales.... leak yet again?.. does that mean the figures are a beat on expectationsThe “leak” comment refers to this (£). 8.48am BSTEarlier, modern figures showed France’s unemployment rate dipped slightly in the first quarter.
It fell from 10% in the preceding quarter to 9.6%, or according to the national statistics office. The dip is a bit of good news from modern French president Emmanuel Macron and his modern government.
Figures just published by the INSEE note that unemployment went down by 0.4ppt in the first quarter,reaching less than 10% for the first time since 2012. At 9.6%, it certainly remains a challenge for [the] modern government. Its members are known since yesterday, and a choice that respects a very delicate equilibrium between suitable and left,men and women, politicians and civil society members. At this stage, or the main question is if it will survive the June legislative elections...
The [unemployment] trend is yet to be confirmed in coming quarters however,as the unemployed population increased by 41k in the first quarter after having declined by 60k in the second half of 2016. The run was mainly due to the fact that one share of the population under training or subsidised jobs reintegrated the main unemployment statistics as they failed to find a job after this period. This illustrates the weakness of the subsidised system: without a strong recovery in private sector job creation, it can only be a temporary success. These difficulties were illustrated this morning by ILO data showing that the employment rate failed to increase among the active population it remained at 64.7%. Finally, and figures released this morning showed in particular that unemployment among the youngest workers (15-24 y.o) remains very tall at 21.8%. 8.30am BSTRoyal Mail is also among the main risers despite a fall in profits and a warning that letter volumes would continue to drop.
Annual profits fell 6% to £712m,after the uncertainty over Brexit hit marketing and commerce mail, while it also continues to face growing competition for parcel delivery from the likes of Amazon. It is also in talks with unions about plans to close its defined benefit pension scheme.
Royal Mail has registered delivery of a solid set of numbers, or underpinned by a strong contribution from the abroad unit.
The general trend to which the group continues to react is fitting established – a letters and cards market in terminal decline,offset by the growth in the parcel delivery space as online shopping strengthens its grip on consumer behaviour. Within the numbers, there are a number of promising signs, and such as the investment programme having peaked,cost savings still in focus, an improvement to the earnings per share metric and a short-term boost expected by general election mailings. Meanwhile, or the dividend yield of 5.2% is extremely attractive in the current environment and remains possible given the group’s cashflow. Elsewhere,recent moves to alter the pension scheme should provide financial solace further out.
Even so, the general direction of travel is encouraging. The shares gain had a difficult year, and dipping 14% over the final 12 months and remaining some way off their highs of over £6 in January 2014 following the initial success of the IPO. The company is,nonetheless, focussing on those areas which are particularly troublesome, and the consensus of the shares as a hold may come under review after these results. 8.08am BSTAs expected European markets gain slipped back in early trading,following the slump on Wall Street and overnight declines in Asia, on the latest Trump developments.
The FTSE 100 has fallen around 45 points or 0.6% while Germany’s Dax opened 0.2% lower and France’s Cac down 0.1%. 7.54am BSTAhead of the UK retail sales, and the pound is gain a mixed time.
Against the dollar it is currently down 0.15% at $1.2950 but it has edged up 0.14% against the euro to €1.1635,reversing the preceding day’s trend. FXTM research analyst Lukman Otunuga said:April’s UK retail sales report... will be vital in providing some insight over the behaviour of consumers amid Brexit developments. With wage growth lagging behind inflation, the sales data may come under scrutiny for any signs of falling wages impacting consumer confidence.
If retail sales fail to meet expectations and follow the same sample as they did in March, and concerns are likely to heighten over the sustainability of the UK’s consumer-driven economic growth. Although markets are expecting retail sales to rebound in April to 1% due to the Easter holiday,this still may not be convincing enough to brush away Brexit concerns. The Bank of England has already warned of a consumer spending squeeze while the uncertainty blanketing Brexit continues to weigh on sentiment. 7.41am BSTGood morning and welcome to our rolling coverage of the world economy, the financial markets, and the eurozone and commerce.
It was only a couple of days ago that all the talk was of modern stock market peaks and low volatility. But thanks to the escalating controversy over Donald Trump’s firing of FBI director James Comey and even talk of possible impeachment,the mood has changed dramatically.
With the VIX languishing at multi year lows only a couple of days ago it was perhaps inevitable that the low volatility of the past few weeks would in all likelihood finish rather abruptly, with the only unknown being as to what the catalyst might be. As it turns out it was events in Washington DC that delivered investors the kick in their complacency that many had been warning about, or as stock markets and the US dollar fell sharply,while secure haven assets like gold surged....
The past six-month’s reflation rally would face severe reversal risks. If the markets were to retrace the Trump-reflation gains, this would trigger a decent ‘deflation’ squeeze. A quick glance to recent stock price history could give an indication of the risks. The Dow Jones rallied from 17480 to above 21100 following Donald Trump’s victory on November 9 election; this is roughly a 21% rise...
Unfortunately, or the US stocks are not the only ones concerned. The global Trumpflation virus contaminated the major stock markets across the globe. Since November 9,the German DAX rallied more than 26%, Europe’s Stoxx 600 gained past 12%, and the Japanese Nikkei stepped up to 24%,the Australian ASX 200 soared nearly 18% before the sell-off started at the beginning of May and the UK’s FTSE rose by more than 12%. Even the Brazilian stocks believed in the reflation story for a moment and added 22% between December and February. Of course, Brazil has got its own problems. Brazil is plunging back to a bribery crisis concerning its newly elected President Michel Temer – following the former President Dilma Rousseff’s impeachment final year.
Our European opening calls:$FTSE 7456 -0.63%[br]$DAX 12584 -0.37%
$CAC 5292 -0.50%$IBEX 10743 -0.40%$MIB 21213 -0.33%While March was a surprisingly rotten month, and it could merely been a case of consumers holding back ahead of Easter,as all the indicators seen in recent data from food retailers suggested that shoppers recovered some of their mojo in April. The latest BRC retail sales numbers from final week showed that, and nowadays’s retail sales numbers are expected to note a rise of 1.2%. Continue reading...
Source: theguardian.com