Global Market Report 19th July 2013

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Dow Jones

The US market rose again on the back of rising regional manufacturing output and falling jobless claims in the US coupled with reassuring words from Federal Reserve Chairman Ben Bernanke. The Dow closed up 78 points at 15,548.54. After-hours Moody’s raised its outlook on the U.S. to stable from negative and affirmed the country’s triple-A sovereign rating. Google and Microsoft second quarter earnings disappointed.

Europe

European markets were in bullish mood with all main bourse finishes in positive territory with the Europe’s benchmark index the STOXX 600 climbing 0.9% to 299.76, close to a seven-week high, boosted by better-than-expected Philadelphia manufacturing data in the US and better-than-expected jobless claims.

FTSE

The FTSE enjoyed the blue skies of London with a gain of just over 62 points to close at 6,634.36. Investors were buoyed by upbeat UK retail sales and a strong start on Wall Street.

Pre-Market Opening

European markets are expected to open easier on the last trading day of the week following disappointing results from US tech companies like Microsoft and Google which are seen as hurting sentiment. The FTSE is expected to open around 30 points easier. Asian markets were mixed with the Nikkei down 160 points and Hang Seng up 43 points at 7am.

The Analyst View

UK retail sales in June increased as consumers picked up deals in stores. Sales rose 0.2% from May, which was in line with forecasts and 2.2% from a year earlier which was ahead of an expected rise of 1.7%.

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US jobless rate fell to a two-month low of 334,000, a fall of 24,000 compared to the expected drop of 13,000. The July Philly Fed came in at 19.8 against an expected 8.0. Leading US broker Morgan Stanley has reduced its US GDP forecast for the 2nd quarter to 0.3% after yesterday’s worse-than-expected housing start numbers. The consensus at the moment is 1.6% so more downgrades are likely.

Forex News

It looks increasingly likely that the Federal Reserve will look to taper the stimulus package in September and with this being reinforced by the strength in the Philadelphia manufacturing index the Dollar had a good day. The USD/JPY was up at ¥100.50, EUR/USD was little changed at $1.3110, AUD/USD was at $0.9171 down from $0.9232, the exception being against the GBP where it was at $1.5220 from $1.5212.

Commodity News

Gold ended the day higher recouping a portion of what it lost yesterday. Spot gold was last quoted up $12.40 at $1,287.50 and silver futures for September delivery fell 0.6 percent to $19.30 per ounce in New York. Brent Crude for September Settlement eased by 4 cents to $108.57 per barrel.

Market Overview

With consumer price index data out in Canada it will be worth monitoring the Loonie (Canadian Dollar) for any difference to the forecast numbers, a stronger than expected number could be seen as bullish for the Loonie. The core CPI number is the more important number and the forecast is -0.3%. I think if there was going to be a surprise it will be a stronger number than forecast.

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Author: David Wilson