Daily Market Update 29 April 2013 - A mundane Monday expected

Daily Market Update 29 April 2013 - A mundane Monday expected

US economic growth rebounded strongly during Q1 with the Commerce Department reporting<http://content.govdelivery.com/attachments/USESAEI/2013/04/26/file_attachments/207078/Gross%2BDomestic%2BProduct%2B%2528First%2BQuarter%2B2013%2BAdvance%2BEstimate%2529.pdf> an increase of 2.5%. While well ahead of the +0.4% annual pace recorded in Q4, the figure was a disappointment to investors, missing economic forecasts for a rise of 3.0%. A huge spike in consumer spending, up 3.2% on the back of a big rise in housing services, coupled with a 1% boost in inventories (largely agricultural related) were the biggest drivers of growth while government expenditure, having knocked off 1.4% in Q4, continued to drag, falling by a further 0.8%.


US core PCE inflation, the preferred measurement of price pressures used by the US Federal Reserve, ticked modestly higher in Q1 with the BEA reporting an annualised increase of 1.2%. While higher than the 1% pace seen previously, the figure remains well below the 2% level targeted by the FOMC. Including volatile items such as fuel and food, inflation was even weaker, coming in at +0.9% against the +1.6% pace of Q4.


US consumer confidence slipped moderately in April with the final reading of the Uni of Michigan/Thomson Reuters survey<http://press.sca.isr.umich.edu/press/press_release> coming in at 76.4. While below the 78.6 figure of March, it was an improvement on the 72.3 preliminary reading released earlier in the month with current conditions and future expectations adding 5.1pts and 3.6pts to the initial survey score.


To what can only be called a sceptical reaction from the markets, Spain’s government released updated economic forecasts on Friday with GDP now expected to shrink 1.3% this year compared to the 0.5% contraction seen previously. While bad, they expect the economy to return to growth next year, forecasting a rise of 0.5%, while unemployment will fall to 26.7% from the 27.2% rate of today. In news that will undoubtedly unnerve some in the debt markets, the 2013 budget deficit was revised up to 6.3% of GDP with the figure not expected to decline below the EU’s 3% target until 2016.

Eurozone private-sector loan growth held steady in March with the ECB reporting an annual decrease at -0.8%. The figure was the same as the upwardly-revised figure of February and marked the 11th-consecutive month that loan demand had decreased.


German import prices slipped modestly in March with Destatis reporting a decline of 0.1%. While half the 0.2% fall expected by the markets, the result still left the annual decrease in prices at -2.3%, well below the -1.6% pace of February.

French consumer confidence remained steady in April with INSEE reporting<http://www.insee.fr/en/themes/info-rapide.asp?id=20&date=20130426> a reading of 84. While in line with economic forecasts, the result was still well below the 101 series average dating back to 1973.


The Day Ahead (All times AEST)


Japanese markets will be off for the Showa Day holiday.


The ASX 200 looks set to open the week fractionally weaker with SPI futures pointing to a decline of 3pts on the open. While big falls on commodity markets suggest we may be in for a bigger decline that what SPI currently suggests, with no firm lead from Wall St, Japanese markets on holiday and having fallen fractionally on Friday already, if there is to be a catalyst to move our market anything other than sideways, it’ll likely come from the movements in Chinese equities.

The Aussie Dollar has opened flat this morning with the currency currently fetching USD1.0275. As is the case with equities, with no major data releases scheduled and the Japanese on holiday, movements of Chinese markets from 11.30am will likely set the tone later in the session. Support at 1.0260 and again at 1.0220 with resistance kicking in at 1.0305 and 1.0340.

A busy data calendar by Monday standards tonight with PCE price inflation, consumer spending and incomes, pending homes sales and Dallas Fed manufacturing index out in the States, the business climate index and new lending figures from the Eurozone, wage inflation and business confidence from Italy, inflation and retail sales from Spain along with German CPI.



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