Good morning,
Go the US GDP. Over the last 2 weeks, investors have been going "gang busters" for growth names, and given last nights figure, there is certainly some justification for this more aggressive stance.
Overnight saw increased profit taking after a very strong December.
In the bond markets France and Germany saw inflows which is not surprising, as funds look for higher grade credit over the holiday period. 10 year yields:
UK 1.945% -0.8, France 1.985 -1.9, Germany 1.415% -1.4%, Italy 4.411% +2.9, Spain 5.199% -2.9, Greece 11.369% +12.1, UST 1.802 flat
In the FX market, the Euro managed to hold the 23 handle, currently trading at 1.3236. Im very impressed with the USDJPY, believing yesterday that the JPY would firm into year end. Instead we see it continue to weaken, now trading at 84.42
In Europeaan equity markets, volumes started to ease back again. Indices opened at the lows and trended firmer, with a small sell down going into the close.
FTSE -0.1% avg volume; O/P:tech, industrial U/P:utilities, basic materials
CAC +0.1% avg volume; O/P:health, basic materials U/P:utilities, tech
DAX +0.1% low volume; O/P:telco, utilities U/P:cons.services, industrials
IBEX flat v.good volume; O/P:basic materials, tech U/P:cons.services, oil & gas
Sectors highlighting rotation, with basic materials, a huge laggard on the year, finally outperforming, whilst defensive names continue to get sold down.
I still like basic materials and oil and gas at these levels as growth estimates should continue benefit from renewed optimism.
Data in Europe looked rather weak. Spain's building permits MoM increased 5.8% in October, but still leaves us down -31% YoY, but there was a sharp pick up in non residential properties.
In Italy, retail sales came in weaker at -1.0% vs estimates of flat, whilst the UK retail sales came in positive 0.1% but missed targets of +0.4%
In the US, equity markets opened at the lows and trended firmer throughout the session, closing at day highs. Also interesting to note that volumes remained around average despite the holiday season vast approaching.
S&P +0.6% avg volume; O/P:financials, basic materials U/P: tech, health
Sectors seeing finacials outperform, which is not surprising given the large pick up in volumes across all asset classes. Basic materials again yesterday outperforming.
Tech seeing a pull back after a very strong fortnight on the back of good earnings from hardware and software manufactures.
Data overnight saw US GDP come in at 3.1% vs expectations of 2.8% for the 3rd quarter. Personal consumption was quite strong at 1.6% vs expected 1.4%, and backing up these number, US existing home sales increased +5.9% MoM vs estimates +2.3% and the Philly Fed came in at 8.1 in December vs -3.0 expected.
Markets. Equity markets in Asia are all stronger after a heavy sell down in markets like Japan yesterday. Volumes are also extremely strong.
Expect profit taking today as we enter the holiday period. Profit taking in Jap autos, consumer electronics, China banks, property and autos whilst short covering in basic materials, oil and gas.
Market should open at the highs and drift easier early on before finding support and flatening off.
Data.13:00 Japan BoJ monthly economic report
15:00 German consumer confidence
15:30 Thailand foreign reserves
15:45 France production outlook
16:00 Spain PPI
17:00 Italy hourly wages
17:30 UK public sector net borrow, GDP
21:30 US Chicago Fed, Personal spending, durable goods orders
22:55 US U. of Michigan confidence
Spain trade balance
Events.15:00 German finance minister publishes report
17:30 Russia EU summit
Bonds.19:10 UK 1,3,6 month auction
Earnings.Walgreen(US), Shaw group(US), Alpha bank(GR), Natl Bk of Greece(GR), Christian Dior(FP), Oldtown(MK)
Happy friday
Stoddart
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