Daily Market Update 23 April 2013 - China PMI the key to today’s session

Daily Market Update 23 April 2013 - China PMI the key to today’s session

US existing home sales fell unexpectedly March with the NAR reporting<http://www.realtor.org/news-releases/2013/04/march-existing-home-sales-slip-due-to-limited-inventory-prices-maintain-uptrend> a decline of 0.6% to 4.92m. The result was below the 0.6% increase that had been expected by the markets with lower inventories and tighter credit conditions largely behind the underwhelming result. While total sales disappointed, there was some good news on the valuations front with the median price up 11.8% on year to $184,300, the biggest increase seen since November 2005.


Eurozone consumer confidence inched higher in March with the EC index<http://ec.europa.eu/economy_finance/db_indicators/surveys/documents/2013/fcci_2013_04_en.pdf> rising to -22.3. The result was above both the -23.5 figure of February and expectations for a decline to -23.85 and was the highest level seen since July 2012.


The Eurozone’s debt-to-gdp ratio continued to push higher during 2012 with Eurostat reporting<http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/2-22042013-AP/EN/2-22042013-AP-EN.PDF> an increase to 90.6%. The figure was higher than the 87.3% reading of 2011 although the budget deficit did decline, falling to 3.7% from 4.2% previously.

Providing further evidence of a slowdown in the global economy, Taiwanese export orders fell unexpectedly in the year to March, coming in at -6.6% against forecasts for an increase of 2.15%.


RBA Board member Heather Ridout was in the news overnight, telling the WSJ<http://online.wsj.com/article/SB10001424127887324874204578438283181560830.html?KEYWORDS=ridout> that the local manufacturing industry “has been facing very, very strong headwinds with the (Australian Dollar) staying high for a sustained period”. While she warned those calling the death of domestic manufacturing “to take a cold shower”, with the sector deep in contraction and showing no signs of adjustment to the high currency as yet, her remarks, coupled with the cancellation of several high-profile mining projects in recent weeks, suggest the RBA may have to ease further should non-mining sectors be unable to fill the growth gap left by the slowing mining boom.


The Day Ahead (All times AEST)


The ASX 200 looks set to push higher this morning with SPI futures pointing to a rise of 16pts on the open. While we will open in the black, how we finish off the session will largely be determined by the Chinese PMI data released at 11.45am with the result likely impact heavily on resources stocks, hence the index, in the latter parts of trade. With resources stocks still beaten down, if there are any risks for the index heading into this release, they’re clearly on the upside.


A quiet session for the AUD overnight with the currency mimicking the movements in US equities throughout. As is the case with equities, the China PMI gauge at 11.45am will be influential on the currency today with slowdown fears like to be amplified or eased in the period following its release. Support is found at 1.0250 and 1.0237 with resistance kicking in at 1.0280, 1.03 and again at 1.0350.


HSBC release their ‘flash’ China manufacturing PMI gauge at 11.45am. With markets already on edge following an underwhelming GDP figure last week, any change to the 51.6 reading of March, even if miniscule, will be leapt on by investors.


Data releases this evening include flash manufacturing PMI gauges from Europe and the States, trade numbers from Switzerland and Italy, public sector borrowing and factory orders from the UK, Taiwan export orders, Italian consumer confidence, retail sales from Canada along with monthly house prices and Richmond Fed manufacturing index from the US.


The Reserve Bank of New Zealand announce their April monetary policy decision at 7am tomorrow morning. While likely to leave the cash rate steady at 2.50%, markets will be pay close attention to the statement, particularly the language on the NZD and recent house price gains.


Apple, AT&T, Delta Airways, US Airways, Xerox and Yum Brands all report Q1 earnings this evening. Given it reports after the bell and its weighting in both the S&P500 and Nasdaq indices, expect Apple’s result to be highly influential on US stock futures over the course of Wednesday’s session.


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