Week Ahead: Positive economic data lift investors morale

Transcription

1 4 February 2013 Week Ahead: Positive economic data lift investors morale The week ahead in business and finance It will be a relatively quiet week for data in the. The week will start with the release of December factory orders. On Tuesday, the ISM non-manufacturing index for January is on tap. Fourth quarter productivity and costs will be posted on Thursday along with the weekly jobless claims, money supply and Fed balance sheet data. Europe The European Central Bank is set to make a monetary policy announcement on Thursday. Mario Draghi dismissed speculation of an imminent rate cut in January s press conference. Therefore, no change to the main refinancing rate is expected, which currently stands at 0.75%. In Brussels, EU leaders are also due to meet for their first summit of Agreeing a multi-year financial framework for the EU will be high on the agenda and discussions are likely to focus on the EU s international trade. Germany s factory orders (Wed) and industrial production figures (Thu) could also attract some market attention this week. In the UK, the Monetary Policy Committee is expected to announce no change to its current policy stance; the base rate of 0.5% and the quantitative easing target of 375 billion is expected to be unchanged on Thursday. Asia Friday will be an eventful day for China. HSBC s unofficial PMI figures for China s services sector are due for release on Tuesday. Later on in the week, on Friday, we will also see the release of Chinese inflation data for both consumers (CPI) and producers (PPI).

2 Summary of key economic events 4 February Japan Monetary base Australia Building approvals Factory orders 5 February Australia Trade balance Australia House price index Australia RBA cash target China HSBC Services PMI Hong Kong Purchasing managers index ISM non-manufacturing index 6 February Australia Retail sales Eurozone ECB releases bank lending survey 7 February Australia Unemployment rate UK MPC announcement Germany Industrial production Eurozone ECB announcement EU EU leaders summit Brussels Productivity (non-farm) Weekly jobless claims 8 February Japan Trade balance China CPI China PPI China Trade balance Source: Bloomberg

3 Performance of major stock market indices End 2013 Daily Percent Change Index 2012 Jan 31 Feb 1 Change Daily 2013 Yr/Yr North America United States Dow NASDAQ S&P Canada S&P/TSX Comp Europe UK FTSE France CAC Germany XETRA DAX Italy MIB Spain Ibex Sweden OMX Stockholm Switzerland SMI Asia/Pacific Australia All Ordinaries Japan Nikkei Hong Kong Hang Seng S. Korea Kospi Singapore STI China Shanghai Comp India Sensex Data Source Haver Analytics

4 markets Shares rallied Friday after the January employment report along with two measures of manufacturing activity showed that the economy s recovery is continuing. The Dow Jones industrials flirted with the 14,000 level during the trading session and ended the day above it while the S&P touched its highest since December The Dow was up 1.1% on the day and 0.8% on the week. The S&P was up 1.2% Friday and 0.7% on the week. The Nasdaq was up 1.2% and 0.9%. Even though employment added 157,000 jobs in January, revisions showed that 127,000 more jobs were created in November and December than previously reported. Two January measures of manufacturing activity increased the Markit PMI increased to a reading of 55.8 from 54.0 while the ISM manufacturing index jumped to 53.1 from 50.7 in December. Friday s data also showed that consumer sentiment was up more than expected while December construction spending also beat forecasts. Exxon Mobil ended flat after reporting results while Chevron advanced. Merck declined after a cautious 2013 outlook. Perrigo gained after it reported better than expected second quarter profit. Second quarter profit excluding some items was $1.36 a share. Dell was up after sources said the company was nearing an agreement to sell itself to a buyout consortium led by Michael Dell and private equity firm Silver Lake Partners. STMicroelectronics and Veeco Instruments advanced. Tyson Foods climbed after reporting that fiscal first quarter earnings rose more than expected. Google hit an all-time high topping last October's peaks. McKesson dropped after fiscal third quarter earnings missed forecasts and the company trimmed its full year outlook. Gold at the afternoon London fixing was up $4.25 to $1, Copper futures were up 1.4% to $3.78. WTI spot crude was up 28 cents to $ Dated Brent spot crude was up $1.21 to $ The dollar was up against the pound, yen and Australian dollars. It was virtually

5 European markets Shares - except for those in Italy and Spain - were up Friday thanks to and Chinese data that were released for manufacturing. employment data also added a boost. The Chinese manufacturing sector expanded for the fourth consecutive month, providing a boost to mining stocks. The FTSE and CAC were up 1.1% while the DAX gained 0.7% and the SMI was 0.4% higher. For the week, results were mixed the FTSE was up 1.0% but the CAC, DAX and SMI were down 0.1%, 0.3% and 0.5% respectively. Deutsche Bank, Infineon Technologies and E.ON increased after broker upgrades. Crédit Agricole gained after it recognized a goodwill impairment charge of billion in its fourth quarter. Société Générale and BNP Paribas also advanced. STMicroelectronics climbed after JP Morgan increased its full year 2013 estimate. BT Group surged after announcing financial results. The company also stated that its full year guidance remains unchanged. Tate & Lyle dropped after announcing third quarter results. Mining stocks performed well, due to the Chinese manufacturing data. Vedanta Resources, Anglo American, BHP Billiton and Rio Tinto advanced. Eurozone manufacturing activity contracted less than initially estimated in January. The manufacturing purchasing managers index reading was 47.9 in January, up from 46.1 in December and slightly above the flash estimate of Eurozone's unemployment rate held at a record high of 11.7% in December as the economy remained mired in recession at the end of last year. The UK manufacturing sector continued to expand at the start of the year, albeit at a slower than expected pace of 50.8.