Daily Market Update 15 March 2013 - Arab Bank Australia

US jobless claims continued to slide last week with the Labour Department reporting<http://www.dol.gov/opa/media/press/eta/ui/current.htm> a decline to 332k. The result was better than both the downwardly-revised 340k clip of the previous corresponding week and expectations for a sequester-induced surge to 350k with the 4-week moving average, a better gauge due to its smoothing effect, falling to 346,750, the lowest level seen since early March 2008.


US producer prices rose at the fastest pace since September 2012 in February with the BLS reporting<http://www.bls.gov/news.release/pdf/ppi.pdf> an increase of 0.7%. The result was in line with economic forecasts but above the 0.2% rise of January with “core” inflation, that which excludes volatile items, rising at a benign 0.2%. With both gauges sitting at 1.7% in annualised terms, there is little to suggest a breakout in CPI will occur at any point the near future.

Canadian new house prices ticked higher in January with Statistics Canada reporting a rise of 0.1%. The result was in line with economic forecasts but below the 0.2% rise of December and left the annualised increase slightly lower at 2.2%.


Eurozone employment continued to decline in the December quarter with Eurostat reporting a fall of 0.3%. The result was triple the 0.1% contraction reported in the three months to September and left the year-on-year decline at 0.8%.


As expected, the Swiss National Bank held monetary<http://www.snb.ch/en/mmr/reference/pre_20130314/source/pre_20130314.en.pdf> policy steady during their March policy meeting with the CHF 3-month Libor band remaining at 0-0.25% and EURCHF peg at 1.20.


Greek unemployment continued to surge in the final quarter of 2012 with the Greek statistics agency ETSTAT reporting<http://www.statistics.gr/portal/page/portal/ESYE/BUCKET/A0101/PressReleases/A0101_SJO01_DT_QQ_04_2012_01_F_EN.pdf> an increase of 1.2% to 26%. The result was worse than both the 24.8% figure recorded in Q3 and 20.7% rate of Q4 2011 with youth unemployment, those persons aged 15-24, soaring to 57.8%.

Spanish retail sales continued to slide in the year to January with the INE reporting<http://www.ine.es/en/daco/daco42/daco4215/ccm0113_en.pdf> a decrease of 10.2%. While incredibly weak, the result was an actual improvement on the downwardly-revised -11.4% contraction reported in the year to December.

Indian wholesale price inflation quickened during February with a year-on-year rise of 6.84% reported. The figure was above both the 6.62% annual pace recorded in January and expectations for a decline to 6.54% with higher food inflation the chief catalyst behind the worse-than-expected result.


The Day Ahead (All times AEDT)


Australian stocks look set to stage a low-volume, short-covering rally to end off the week with another surge on Wall St, coupled with three-consecutive declines locally, likely to ensure a positive trading session. SPI futures point to a rise of 18pts on the open, something that is likely to be exceeded quickly once the physical market opens at 10am this morning. While there may be some softness in the materials space, the iron ore price slid 4.4% overnight, it wouldn’t surprise to see the index finish with a gain of around 1% led by buying in the financial and consumer discretionary space.


Having surged yesterday following the February labour force statistics, the Australian Dollar has consolidated gains overnight with the currency trading in a relatively-thin band between 1.0336 and 1.0401. Today we expect all of the action to occur early in the session with a test of resistance between 1.0401-15 likely in the early parts of trade. Should this attempt fail, something that’s likely to occur given ongoing US data strength, we expect the Aussie to meander its way through the afternoon with any move back towards 1.0360 likely to find support.


Regional data releases today include New Zealand business PMI along with Chinese foreign direct investment for February.


Inflation gauges dominate the data calendar this evening with US and Eurozone CPI set to shape the markets direction. Elsewhere we’ll also receive real weekly earnings, Empire State manufacturing index, industrial production and University of Michigan consumer confidence survey in the States along with the leading index in UK.


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