Comment: European Stock Markets Higher After IMF Upgrade
January 22, 2014 6:53 am
European equities march higher Wednesday morning after the IMF’s upgrade of global growth on Tuesday provided comfort to investors. Asian markets were trading mostly lower overnight, after the Bank of Japan lowered Japan’s median economic growth forecast. However, losses were subdued, as the Bank of Japan also pledged to maintain economic stimulus.
Emerging market nations remain a concern; Turkish lira remains pressured after the country’s central bank yesterday held steady on rates despite hopes of monetary tightening, triggering a free-fall for the currency. Over in Asia, Thailand’s central bank unexpectedly held onto policies too despite calls for 0.5% cut. Traders feel that inability by EM central banks to implement effective policy tools to safe-guard economies leave them vulnerable to capital outflows as the Federal Reserve remove stimulus this year and as asset allocators favour developed economies on their economic growth prospects over EM economies.
Here in Europe, earnings out of leading blue-chips are in the spotlight again this morning; BHP Billiton, in its half year operational performance review, reported that its iron ore output grew less than expected by 16.0% to 48.9 million metric tonnes in the second quarter. The numbers were strong in most areas however with the exception being petroleum. Encouragingly, the miner maintained its FY14 production estimate at 212.0 million metric tonnes. Elsewhere, ABB, the Swedish engineering giant warned on profits due to charges racked up from project delays following severe weather. That’s led to around $260million of charges; on top of that, the company said it will take a further $50million of restructuring charges – this has left investors feeling less than optimistic about ABB’s outlook this year.
Looking ahead, UK macro will once again steal the spotlight with jobs data and the Bank of England’s meeting minutes, a day after the IMF optimistically raised its forecast for UK growth this year. For the jobs data, expectations are for around a 30k drop in joblessness and the unemployment rate to tick lower to 7.3% from 7.4%. BOE minutes will be under scrutiny as the central bank again held steady on rates at the last meeting but so far has stayed tight lipped on re-adjusting forward guidance thresholds despite the improving jobs market and easing inflation to the Bank’s target. Over in the US, eBay and United Technologies are slated to report Q4 reports.
European equities march higher Wednesday morning after the IMF’s upgrade of global growth on Tuesday provided comfort to investors. Asian markets were trading mostly lower overnight, after the Bank of Japan lowered Japan’s median economic growth forecast. However, losses were subdued, as the Bank of Japan also pledged to maintain economic stimulus.
Emerging market nations remain a concern; Turkish lira remains pressured after the country’s central bank yesterday held steady on rates despite hopes of monetary tightening, triggering a free-fall for the currency. Over in Asia, Thailand’s central bank unexpectedly held onto policies too despite calls for 0.5% cut. Traders feel that inability by EM central banks to implement effective policy tools to safe-guard economies leave them vulnerable to capital outflows as the Federal Reserve remove stimulus this year and as asset allocators favour developed economies on their economic growth prospects over EM economies.
Here in Europe, earnings out of leading blue-chips are in the spotlight again this morning; BHP Billiton, in its half year operational performance review, reported that its iron ore output grew less than expected by 16.0% to 48.9 million metric tonnes in the second quarter. The numbers were strong in most areas however with the exception being petroleum. Encouragingly, the miner maintained its FY14 production estimate at 212.0 million metric tonnes. Elsewhere, ABB, the Swedish engineering giant warned on profits due to charges racked up from project delays following severe weather. That’s led to around $260million of charges; on top of that, the company said it will take a further $50million of restructuring charges – this has left investors feeling less than optimistic about ABB’s outlook this year.
Looking ahead, UK macro will once again steal the spotlight with jobs data and the Bank of England’s meeting minutes, a day after the IMF optimistically raised its forecast for UK growth this year. For the jobs data, expectations are for around a 30k drop in joblessness and the unemployment rate to tick lower to 7.3% from 7.4%. BOE minutes will be under scrutiny as the central bank again held steady on rates at the last meeting but so far has stayed tight lipped on re-adjusting forward guidance thresholds despite the improving jobs market and easing inflation to the Bank’s target. Over in the US, eBay and United Technologies are slated to report Q4 reports.
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