Wednesday 14th June 2017
US
–
US stocks ended higher on Tuesday with the Dow and S&P 500 at records as
technology stocks rebounded from the recent selloff ahead of an expected rate hike
by the Federal Reserve.
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The Dow Jones Industrial Average closed up 0.44% to 21,328.47, the S&P 500
rose 0.45% to 2,440.35 and the tech-heavy Nasdaq finished 0.73% higher at
6,220.37 as technology stocks recovered from their recent losses.
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Today marks the second day of the Federal Reserve’s policy setting meeting. Markets
are assigning a 95% probability of a rate hike which would take rates to a range of 1 to
1.25%.
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Chesapeake Energy corporation was the best performing stock yesterday in the
S&P 500, up 4.35%. Mylan was the worst performing stock in this index, down
3.6%.
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Technology shares rebounded, with Facebook up 0.8%, Alphabet up 0.4% and
Amazon up 0.9%.
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Cheesecake factory shares dropped 10.5% after the company cut its second
quarter outlook.
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Eli Lilly dropped 0.3% despite the company saying its pain drug with Pfizer had
received fast track designation from the Food and Drug Administration.
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In economic news yesterday, US producer prices were flat in May versus April,
while the year-on-year rate dipped from a 2.5% clip to 2.4%, according to the
Bureau of Labour Statistics.
–
There is lots of US data being released today, with CPI inflation and Retail Sales. CPI
is expected to come in at 2% YoY (down from 2.2%) and Retail Sales are
expected to fall to 0% growth in May, from 0.4% in April. The main highlight will
be the FOMC rate decision at 7pm where the Fed is expected to raise rates to an
upper band of 1.25%.
Europe
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UK stocks sold off yesterday as the Pound got a boost from higher than
expected inflation. Meanwhile, stocks in Europe were generally strong.
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The FTSE 100 finished Tuesday down 0.15% to 7,500.44, and the FTSE 250
closed down 0.90% to 19,859.54.
–
In Europe, the Stoxx 600 was higher by 0.55% to 388.75, alongside a rise of
0.59% to 12,764.98 for Germany's Dax and a gain of 0.40% to 5,261.74 in Paris's
Cac-40. The Italian FTSE MIB was up 0.85%.
–
London Stock Exchange rose 5.38% as it benefited from the European Commission
draft on clearing, which was not as bad as feared. LSE was also lifted by target price
increases at RBC Capital Markets and Credit Suisse. It was the best performing stock
in the FTSE 100.
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3i Group was on the back foot after Morgan Stanley downgraded the stock to
'equalweight' from 'overweight', saying it was time for profit taking. It was down 2.96%
and was the worst performing stock in the FTSE 100.
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Outsourcer Capita rose 15.17% after it reported "good progress" on its restructuring
and said the turnaround of IT Services was progressing better than expected. This
was the best performing stock in the FTSE 250.
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Merlin Entertainments was down 2.68% after it warned over the impact of the UK
terror attacks.
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Deutsche Lufthansa AG climbed 3%. Credit Suisse raised its rating on the German
air carrier to neutral from underperform.
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On the economic data front, the UK's consumer-price index was up 2.9% year-onyear in May, its highest level since June 2013 and up from 2.7% in April. CPI rose
0.3% on the month in May, from 0.5% in April.
–
Today we have jobs data for the UK. This includes the Unemployment Rate
(expected to remain steady at 4.6%) as well as wage data.
Asia
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Equities in Asia were mixed on Wednesday as oil prices fell after a surprise build in
U.S. stocks and China data came in mostly in line with expectations.
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Greater China markets were in the red after the release of economic data earlier in the
session. The Hang Seng Index was off by 0.05%. On the mainland, the Shanghai
Composite edged down by 0.73% and the Shenzhen Composite was 0.38% lower.
The CSI 300 closed down 1.31%.
–
Chinese data was mixed. Retail sales came in at 10.7% YoY which was in line with
expectations. Fixed Asset growth was a little shy of expectations, coming in at
8.6% YoY growth versus expectations of 8.8%.
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Japanese markets were broadly flat. The TOPIX was down 0.11%, the Nikkei
down 0.08% and the Nikkei 400 down 0.1%.
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The Korean Kospi was down 0.09% and the Taiwanese TAIEX was down 0.55%.
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In Australia, the ASX 200 was up 1.06%. Nine Entertainment was the best
performing stock in this index, up 6.23% and Healthcare was the best
performing sector, up 2.5%.
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There will be more economic data out of China overnight, with Money Supply data
as well as Foreign Direct Investment data.
Bonds
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10yr and 30yr US treasuries are currently trading at 2.20% and 2.86% respectively.
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10yr UK gilts trade with a yield of 1.03%.
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German 10yr bund yields trade at 0.26%.
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10yr Italian and Spanish bond yields trade at 1.96% and 1.41% respectively.
Commodities
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The WTI crude oil price is $46.07
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Brent crude is $48.40
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The gold price is $1,268
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The silver price is $16.92
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The COMEX copper price is $2.59
Currency
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The Yen is trading at 110.06 against the US dollar.
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The pound is trading at 1.28 against the US dollar.
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The pound is trading at 1.14 against the Euro.
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