Good morning,
Tokyo led Asian stocks higher on Monday, as the Nikkei heads
towards a close above 17,000 points for the first time in a month, after the
yen plummeted against the strengthening dollar. Data released earlier in the
session showed Japanese industrial output unexpectedly rose 0.3% in April,
suggesting production is holding up despite weak exports and the impact from a
series of earthquakes that struck southern Japan during that month. Shares in
Shanghai surged +2.43% , Hong Kong +1.25%, while the ASX slipped -0.19%.
Underpinning Asian sentiment, European shares hit one-month highs on Monday
amid otherwise light trade with markets in London and New York closed for
public holidays.
In FX space the Aussie gained against its peers as building
approvals data for April came in much better than expected (+3% against -3%
exp). The positive sentiment also saw the Kiwi rally, whilst sterling soared
above the 1.47 only to quickly retreat back towards the 1.4650 handle against
the US dollar. The Euro is also under pressure as we head towards the European
open.
Gold rose for the first time in 10 days -- breaking its
longest losing streak in more than a year and currently sitting at $1212.
Although strongly underpinned amid the extended broad based US Dollar
correction, it looks to build a recovery towards the 100 dma located around
$1217.50. Oil pushed back towards the psychologically key $50 a barrel mark as moves
were limited ahead of Thursday's meeting of the Organization of the Petroleum
Exporting Countries. WTI sits at %49.58 and Brent at $49.73.
So to the day ahead and it looks to be a busy day as we
enter the last sessions of the month. First up we have German Retail
sales (0700 BST) and Unemployment Report (0855 BST). Last week’s sentiment data
suggests that Germany’s moderate growth trend will roll on, based on survey
figures for consumers, the financial community and the business sector. There’s
still concern about the near-term outlook, according to business polling, but
overall, the mood points to more of the same: Economic expansion that’s less
than stellar but strong enough to support the Eurozone's modest recovery.
Forecasters are looking for a positive retail sales number of 1% whilst the
jobless rate is set to remain unchanged at a low 6.2%. Close attention will be
paid to the monthly update on changes in the number of newly unemployed workers
for deeper context about the labour market trend.
Canadian GDP (1330 BST) The economy declined 0.1% in March,
its first decline since November 2015 and the estimate for April is more of the
same. According to Bank of Montreal, first quarter GDP is expected to rise
nearly 3% annualized, thanks to solid growth at the turn of the year and a nice
boost from net exports. Unfortunately, it said, the economy lost momentum as
the quarter progressed, with March GDP expected to come in flat after a small
contraction in the prior month adding Canada is going to get some sizeable
volatility in the months ahead due to the Alberta wildfires and resulting drop
in oil production.
US Consumer Confidence Indicator (1500 BST) Last week’s
revised data for the University of Michigan’s Consumer Sentiment Index for May
points to an improvement in the mood at the Q2 midpoint. The benchmark was
revised down a bit from the preliminary reading for this month, but the index
still posted a solid bounce higher against April – and relative to recent
history as well. The CSI’s strength bodes well for today’s release of the
Conference Board’s Consumer Confidence Indicator (CCI), a competing measure.
The two indices track one another, although there can be substantial
differences in the short term. Economists think that today’s first look at the
May data for CCI will post a solid rise to 96.0 for May against 94.2 in the
previous month. A firmer reading for the Conference Board’s index isn’t
surprising in the wake of CSI’s latest jump. If the upbeat forecast holds, the
case will strengthen for arguing that consumer optimism is rising in the second
quarter.
Trade Smarter
Anish
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