Focus On Eurozone GDP After ECB's Rate Bombshell

BySaxo Bank

AuthorSaxo Bank

Market Overview

Published 09/05/2014, 05:40 AM

Updated 03/19/2019, 04:00 AM

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EUR extends yesterday's decline, although trading marginally higher against GBP
Fed governor says Fed might increase rates more quickly if job gains remain firm
Japan's foreign exchange reserves increase to $1.278 billion in August

Forex Overnight: EUR trading mostly lower

Currencies Intraday

The EUR is trading weaker against most of its major counterparts this morning, extending yesterday’s decline. Yesterday, the European Central Bank surprisingly slashed its interest rate and announced new stimulus measures.

Looking ahead, traders will closely watch Eurozone second-quarter gross domestic product data for further guidance. Across the Atlantic, US non-farm payrolls and unemployment rate data will attract investors’ attention, especially after yesterday’s disappointing private employment data from Automatic Data Processing and weekly jobless claims figures.

Meanwhile, two of the top Federal Reserve Bank officials, Richard Fisher and Loretta Mester, expressed optimism on the recovery aspect of the US economy, but another official, Narayana Kocherlakota, highlighted the need for lower interest rates to support economic growth.

At 05:00 GMT, the EUR had declined 0.1% against the USD to trade at $1.2934 while it has risen marginally against the GBP to trade at GBP 0.7929.

UK Stocks: Likely to open in the red
FTSE 100 Intraday

The FTSE 100 is expected to open 11 to 12 points in negative territory.

Consumer inflation expectations and Halifax House Prices are the key economic indicators scheduled for release today.

EMIS Group (EMIS) is scheduled to report results today.

Barclays (BARC) has announced that it is launching a finger vein scanner for corporate clients and would unveil voice recognition biometrics for retail clients next year in order to combat banking fraud.

Smith & Nephew (SN/) has agreed to pay a fine of $11.3 million to settle a lawsuit alleging the company was selling US government devices made in Malaysia while claiming that they were made in the US.

Asia: Trading mostly lower
Nikkei 225 Intraday

Asian markets are trading mostly in the red this morning.

In Japan, Sony (6758) slid, extending its previous session’s losses after the company unveiled new products in Berlin. Artiza Networks (6778) tumbled after it projected a drop in its net income. However, Sekisui House (1928) advanced after it reported a significant rise in its first-half year income. Exporter, Toyota Motor (7203) gained on the back of a weaker yen. At 05:00 GMT, the Nikkei 225 index had dropped 0.2% to trade at 15,647.0.

In South Korea, Hyundai Greenfood (005440) slipped after the company announced its decision to abandon a planned $147 million acquisition of WiniaMando. In China, CITIC Securities (600030) and Haitong Securities (600837) advanced while CSR Corporation (601766) and China CNR (601299) jumped as trading resumed in both stocks. Both companies denied yesterday’s news report that indicated the government wanted both companies to merge their operations.

In Hong Kong, China Hongqiao Group (1378) plunged after it revealed plans to sell new stocks to its controlling shareholder.

US Stocks: Futures trading in negative territory
S&P 500 Intraday

At 05:00 GMT, S&P 500 futures were trading 2.6 points weaker.

Key economic indicators scheduled for release today include Change in Non-farm Payrolls, Unemployment Rate, Underemployment Rate, Average Hourly Earnings and Household Change in Net Worth.

No companies are scheduled to announce their results today.

In the after-hours trading session yesterday, Quiksilver (ZQK) tumbled 9.9% after it reported disappointing third-quarter results. The Gap (GPS) slid 5.6% after the company posted a drop in its same-store-sales for August. Michael Kors (KORS) shed 4.3% after it announced a secondary public offering of around 11.6 million shares.

Zumiez (ZUMZ) fell 3.4% as the company forecast weaker-than-expected third-quarter earnings. On the other hand, El Pollo Loco (LOCO) advanced 4.6% on the back of upbeat second-quarter results. Infoblox (BLOX) rallied 11.9% as the company’s fourth-quarter earnings came in ahead of analysts’ guidance.

Yesterday, the S&P 500 index declined 0.2% in the regular trading session amid weakness in energy sector stocks. On the economic front, data from the Institute for Supply Management indicated that the non-manufacturing purchasing managers’ index unexpectedly rose in August but separate data showed that the US private sector added fewer than expected jobs in August while initial jobless claims rose last week.

Chevron (CVX) and Exxon Mobil (XOM) lost 0.8% each, tracking a fall in crude oil prices. Halliburton (HAL) and Transocean (RIG) declined 1.5% and 0.8%, respectively. A US court found both companies “negligent” in causing the Gulf of Mexico spill in 2010.

Joy Global (JOY) shed 2.7% as the company’s third-quarter earnings trailed analysts’ estimates. On the upside, PVH Corporation (PVH) surged 9.6% after it posted upbeat second-quarter earnings. Fastenal (FAST) jumped 4% after the company reported a significant rise in its August sales figures.

Intel (INTC) gained 1% after it announced a new collaboration with Dell, Emerson (EMR) and Hewlett-Packard (HPQ) to create Redfish, a new specification for data centre management. Emerson added 0.5% but Hewlett-Packard lost 1.1%. Yum! Brands (YUM) edged up 0.3% even as the company projected a drop in its Chinese division sales for the recent quarter. Nordstrom (JWN) advanced 1.1% after it approved a $1 billion share repurchase program.

Europe Stocks: Expected to open weaker
EU Stoxx50 Intraday

The DAX and the CAC are likely to open 20 to 24 points and six to nine points lower, respectively.

Key economic indicators scheduled for release today include Eurozone GDP, Household Consumption and Government Expenditure, German Industrial Production, French Consumer Confidence and Swiss Industrial Production and Foreign Currency Reserves.

Fonciere Inea SA (INEA), Ceotronics AG (CEK), DF Deutsche Forfait AG (DE6) and U-Blox Holding AG (UBXN) are scheduled to report results today.

Air France-KLM (AF) has unveiled a new strategic plan which includes the restructuring of its cargo business and shifting of more flights to its discount unit, Transavia.

In an interview with German newspaper Suddeutsche Zeitung, the chief executive officer of Klockner & Company SE (KCO), Gisbert Ruhl, projected a more than 2% rise in demand in the European steel industry in 2015.

Macro Update

Fed might move faster on rate hikes if job gains remain firm, says Fed’s Powell

US Fed governor, Jerome Powell, has indicated that the Fed might move faster to hike interest rates if job gains and economic growth remain firm. He also hinted that the Fed must look for an alternative to the LIBOR rate as it is becoming difficult for banks to use this rate to credibly set their benchmark lending rate.

Fed’s Fisher says US economic growth remains on track

Dallas Fed president, Richard Fisher, has indicated that the US economic recovery is strengthening with reference to the recent upbeat manufacturing and services sector surveys from the Institute for Supply Management. He also stated that he believed the Fed would soon be ready for gradual interest rate hikes but did not comment on the time line.

Fed's Kocherlakota says interest rates in the US are not low enough

Minneapolis Fed president, Narayana Kocherlakota, has said the Fed’s interest rate is not low enough to improve the nation’s inflation rate and employment conditions and that the Fed must take more measures to boost economic growth.

Japan’s foreign exchange reserves rise

Foreign exchange reserves in Japan have increased to $1,278 billion in August from foreign exchange reserves of $1,276 bn posted in the previous month.

Australian performance of construction index climbs, indicates AiG/HIA

The Australian Industry Group and the Housing Industry Association have reported that the performance of the construction index in Australia has risen to a reading of 55.0 in August from a reading of 52.6 recorded in the previous month.

Economic Calendar

Country

GMT

Economic Indicator

Relevance

Consensus/*Actual

Previous/ **Previous Est.

Frequency

0:15

Fed's Fisher Speaks in Dallas

Medium

1:00

Fed's Kocherlakota Speaks in Helena, Montana

Low

Japan

5:00

Leading Economic Index (Jul) (P)

Medium

106.50*

105.90

Monthly

Japan

5:00

Coincident Index (Jul) (P)

Low

109.90*

109.70

Monthly

Japan

5:00

Bank of Japan Monthly Economic Survey (Sep)

High

Monthly

Germany

6:00

Industrial Production n.s.a. and w.d.a. (YoY) (Jul)

Medium

0.60%

-0.50%

Monthly

France

6:45

Consumer Confidence (Aug)

Low

85.00

86.00

Monthly

Switzerland

7:00

Foreign Currency Reserves (Aug)

Low

CHF 455.80 bn

CHF 453.39 bn

Monthly

Switzerland

7:15

Industrial Production (YoY) (Q2)

Medium

1.50%

0.50%

Quarterly

8:30

Consumer Inflation Expectations

High

2.60%

Eurozone

9:00

Gross Domestic Product s.a. (YoY) (Q2) (S)

High

0.70%

0.70%**

Quarterly

Eurozone

9:00

Household Consumption (QoQ) (Q2)

Low

0.30%

0.10%

Quarterly

Eurozone

9:00

ECB's Nouy Speaks on Panel on Banking in Brussels

Low

Eurozone

9:00

Gross Domestic Product s.a. (QoQ) (Q2) (S)

High

0.00%

0.00%**

Quarterly

Eurozone

9:00

Gross Fixed Capital (QoQ) (Q2)

Low

-0.60%

0.30%

Quarterly

Eurozone