Nikkei Up Despite Negative Macroeconomic Data, Brent Crude Continues to Trade at High Levels
June 18, 2014 7:43 am
Equity markets in Europe traded higher for a second consecutive session as market participants continue to hunt for value; continued violence in Iraq is still affecting the markets, though traders are focussed on the Federal Reserve’s policy meeting decision later.
The Fed is set to reduce the bond buying programme by $10 billion to $35 billion and retain interest rates at current levels. The Fed will also release a new set of quarterly forecasts for unemployment, inflation, economic growth and the benchmark federal funds rate – traders will analyse this updated forecast for indications as to when the Fed will raise interest rates. In the UK, we have had minutes from the Bank of England’s May meeting – as indicated by BOE Governor Mark Carney in his Mansion House speech on Thursday, the central bank suggested that rates could be increased earlier than the market expects, teeing the market up for an environment of gradual rate hikes. In the FX space, sterling moved higher following the BOE minutes while euro was largely flat and the USD was steady.
Events in Iraq are being closely followed after Islamist insurgents seize Iraq’s biggest oil refinery with mortars and machine guns, reportedly attacking from two directions. Oil remains pressured by the events, with Brent crude trading down a few cents to around $113.20 a barrel, remaining below last week’s nine-month intraday high of $114.69. Violence in Iraq has largely been confined to the north of the country but markets are worried about possible advances south by insurgents. Additionally, there are worries that the US will expand its military presence in Iraq by sending more troops on ground – already, a US aircraft carrier and five other warships are now stationed in the Persian Gulf.
On Tuesday in the US, the S&P 500 rose 0.2% but those results didn’t have much of a bearing on the Asian session overnight; most markets drifted lower with the exception of the Japanese national index. In Tokyo, the Nikkei 225 advanced on the preliminary blueprint for Japan’s “third arrow” of reforms set out by Prime Minister Abe. Data from Japan showed exports fell for the first time in more than a year last month, while imports declined for the first time since October 2012. Elsewhere, Hong Kong’s Hang Seng was flat while the Shanghai Composite fell after data showed property prices cooling on the Chinese mainland. China new home prices data rose 5.6% from a year ago, versus a 6.7$ rise in April.
Equity markets in Europe traded higher for a second consecutive session as market participants continue to hunt for value; continued violence in Iraq is still affecting the markets, though traders are focussed on the Federal Reserve’s policy meeting decision later.
The Fed is set to reduce the bond buying programme by $10 billion to $35 billion and retain interest rates at current levels. The Fed will also release a new set of quarterly forecasts for unemployment, inflation, economic growth and the benchmark federal funds rate – traders will analyse this updated forecast for indications as to when the Fed will raise interest rates. In the UK, we have had minutes from the Bank of England’s May meeting – as indicated by BOE Governor Mark Carney in his Mansion House speech on Thursday, the central bank suggested that rates could be increased earlier than the market expects, teeing the market up for an environment of gradual rate hikes. In the FX space, sterling moved higher following the BOE minutes while euro was largely flat and the USD was steady.
Events in Iraq are being closely followed after Islamist insurgents seize Iraq’s biggest oil refinery with mortars and machine guns, reportedly attacking from two directions. Oil remains pressured by the events, with Brent crude trading down a few cents to around $113.20 a barrel, remaining below last week’s nine-month intraday high of $114.69. Violence in Iraq has largely been confined to the north of the country but markets are worried about possible advances south by insurgents. Additionally, there are worries that the US will expand its military presence in Iraq by sending more troops on ground – already, a US aircraft carrier and five other warships are now stationed in the Persian Gulf.
On Tuesday in the US, the S&P 500 rose 0.2% but those results didn’t have much of a bearing on the Asian session overnight; most markets drifted lower with the exception of the Japanese national index. In Tokyo, the Nikkei 225 advanced on the preliminary blueprint for Japan’s “third arrow” of reforms set out by Prime Minister Abe. Data from Japan showed exports fell for the first time in more than a year last month, while imports declined for the first time since October 2012. Elsewhere, Hong Kong’s Hang Seng was flat while the Shanghai Composite fell after data showed property prices cooling on the Chinese mainland. China new home prices data rose 5.6% from a year ago, versus a 6.7$ rise in April.
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