Comment: Asian Markets Up After Further Record US Highs, Disappointing European Macroeconomic Data
May 28, 2014 8:13 am
European equity markets are on the soft side Wednesday but still trading around six-year highs after a fresh record close on Wall Street. European equities are currently trading around their highest level since January 2008 – many in the market are pausing for breath given the elevated level that regional benchmarks are trading at.
The S&P500 in the US recorded another record high Tuesday, propelling Asian markets overnight – in China, the Shanghai Composite rose after data showed industrial corporations’ profit rose 10% for the year to April, compared with the same period in 2013. Japanese markets rose too but the most notable gainer in Asia overnight was Thailand’s SET index which is up 1% on hopes that the military coup there can bring greater stability to the country.
On Tuesday, data from the US injected confidence into markets with a report showing April orders for durable goods rose 0.8% from a year ago and the S&P/Case-Shiller home prices index for March climbed 12.4% from a year ago. Additionally, a report on US consumer confidence also showed a slight increase in May, in line with market expectations.
FX markets are steady with the USD doing a tad better than EUR and JPY – the EUR remains under pressure on potential European Central Bank stimulus next week. Among commodities, gold is up a buck to $1,264 an ounce, while Brent oil is up 30 cents to $110.28 a barrel and copper is steady near a three-month high.
Continued central bank activism underpins the mood in global markets with supportive measures by the Federal Reserve in place despite the incremental tapering of asset purchases. Other central banks remain highly accommodative such as the Bank of England and the Bank of Japan – the ECB however has been seen as slow to action, not doing enough to support the euro zone economy. However, expectations are high that the ECB will launch a stimulus package after hints from Mario Draghi, the ECB president, who warned of risks to the euro zone’s fragile recovery. Data out already today certainly adds support to that statement; French consumer spending fell month-on-month in April by 0.3%, driven by poor weather – the reading was far below the market expectations. Meanwhile, data out of Germany show that unemployment has unexpectedly ticked up with the number of people looking for jobs increasing by 24,000 during May, versus economists’ expectations of a 15,000 person decline – this is on a seasonally adjusted basis and the unemployment rate remains unchanged at 6.7%. Looking ahead, we have euro zone confidence indicators and the UK CBI distributive trades later today.
European equity markets are on the soft side Wednesday but still trading around six-year highs after a fresh record close on Wall Street. European equities are currently trading around their highest level since January 2008 – many in the market are pausing for breath given the elevated level that regional benchmarks are trading at.
The S&P500 in the US recorded another record high Tuesday, propelling Asian markets overnight – in China, the Shanghai Composite rose after data showed industrial corporations’ profit rose 10% for the year to April, compared with the same period in 2013. Japanese markets rose too but the most notable gainer in Asia overnight was Thailand’s SET index which is up 1% on hopes that the military coup there can bring greater stability to the country.
On Tuesday, data from the US injected confidence into markets with a report showing April orders for durable goods rose 0.8% from a year ago and the S&P/Case-Shiller home prices index for March climbed 12.4% from a year ago. Additionally, a report on US consumer confidence also showed a slight increase in May, in line with market expectations.
FX markets are steady with the USD doing a tad better than EUR and JPY – the EUR remains under pressure on potential European Central Bank stimulus next week. Among commodities, gold is up a buck to $1,264 an ounce, while Brent oil is up 30 cents to $110.28 a barrel and copper is steady near a three-month high.
Continued central bank activism underpins the mood in global markets with supportive measures by the Federal Reserve in place despite the incremental tapering of asset purchases. Other central banks remain highly accommodative such as the Bank of England and the Bank of Japan – the ECB however has been seen as slow to action, not doing enough to support the euro zone economy. However, expectations are high that the ECB will launch a stimulus package after hints from Mario Draghi, the ECB president, who warned of risks to the euro zone’s fragile recovery. Data out already today certainly adds support to that statement; French consumer spending fell month-on-month in April by 0.3%, driven by poor weather – the reading was far below the market expectations. Meanwhile, data out of Germany show that unemployment has unexpectedly ticked up with the number of people looking for jobs increasing by 24,000 during May, versus economists’ expectations of a 15,000 person decline – this is on a seasonally adjusted basis and the unemployment rate remains unchanged at 6.7%. Looking ahead, we have euro zone confidence indicators and the UK CBI distributive trades later today.
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