Good morning,
Asia stocks were mixed on Thursday following a rally during
the previous session, but energy firms were mostly up after oil surged past $50
a barrel for the first time this year. Investors seemed to brush off another
strong lead from Wall Street and Europe, treading softly as the Group of Seven
leaders' summit kicked off in Japan, where the sputtering global economy is
likely to top the agenda. The Nikkei is up 0.5%, the ASX +0.3% with Shanghai
and the Hang Seng down 0.97% and 0.41% respectively.
The yen surged on Thursday, taking some of the wind out of
the sails of the recently buoyant dollar and prompting investors to cover
positions against a backdrop of potential event risks, including a speech by
Federal Reserve chief Janet Yellen. A sudden spike in the yen in relatively
illiquid conditions triggered stop-loss orders and brought the Japanese
currency as low as 109.42 against the US dollar from a session high of 110.235.
Japanese Finance Minister Taro Aso said on Wednesday that he told his G7
counterparts at a finance leaders' meeting last week that Japan will raise the
tax as planned. But he did not say whether that meant Japan has officially
pledged to the international community that it will go ahead with the increase.
The Aussie dollar was also a mover overnight as Q1 capex
came in well below expectations (-5.2% v -3.2% exp), the initial move lower on
the headline (0.7162 vs US dollar) then saw the Aussie rally back through the
0.72 handle as the full details were digested. Elsewhere the US dollar has been
on the back foot throughout the session as risk trades are again prominent.
Having bottomed out near $1218 region during Wednesdays
trading, gold staged a solid comeback overnight on the back of profit-taking
after the recent weakness. The bullion finally brought an end to its six-day
losing streak rising to highs of $1234.35 before consolidating around the $1230
handle.
Brent crude passed $50 a barrel for the first time in 2016
on Thursday after data showed a fall in US crude inventories, adding to expectations
of a tightening global market. Markets are now eyeing a June 2 meeting of the
Organization of the Petroleum Exporting Countries in Vienna where it is hoped a
deal on reducing production can be reached. WTI currently sits at $49.88 and
Brent $50.10.
So to the day ahead and first up we have UK Second Estimate
GDP (0900 BST). The markets had their first look at GDP figures for Q1 with the
release of Preliminary GDP in April, which showed a gain of 0.3%. This was
short of the estimate of 0.5%. Little change is expected in the Second Estimate
GDP release, with a forecast of 0.4% which is in line with the macroeconomic
figures released lately.
US: Durable Goods Orders (1330 BST) Manufacturing appears to
be recovering from its recent recession, but the preliminary numbers for May
via survey data suggest otherwise. Markit’s purchasing managers’ index revealed
that output fell this month for the first time more than six years. The hard
data for April, however, is expected to deliver brighter news, albeit in terms
of a one-month lag relative to the latest PMI update with headline orders for
durable goods rising for a second month in a row, which hasn’t happened since
last summer.
US: Initial Jobless Claims (1330 BST) New filings for
unemployment benefits fell a hefty 16,000 to a seasonally adjusted 278,000 for
the second week of May. The decline is the first weekly slide since mid-April.
The question is whether the recent surge in claims will continue in today’s
release. Although last week’s report offered an encouraging change of pace,
it’s always risky to reason from one number with the volatile claims data. A
second weekly decline, however, will offer a more reassuring message. The crowd
will be looking at today’s claims data to help decide if the PMI warning is
noise or an early sign of trouble for the labour market.
Good luck
Anish S. Lal – VP Sales
FX & Precious Metals, Atom8
Financial Services LLP
2nd Floor, Centenary House, Palliser
Road, London W14 9EQ, UK
Risk Warning
Trading on margin (spread betting, CFDs and FX)
carries a high level of risk and may not be suitable for all investors.
The high degree of leverage can work against you as well as for you.
Before deciding to trade your live account, you should carefully consider your
investment objectives, level of experience and risk appetite. You could
lose more than your initial investment and should not trade with funds you
cannot afford to lose. You should be aware of all the risks associated
with foreign exchange trading, and seek advice from an independent financial
advisor if you have any doubts.
