Daily Market Update 10 September 2013 - China ‘hopes’ to again drive sentiment

Daily Market Update 10 September 2013 - China ‘hopes’ to again drive sentiment

US consumer credit expanded at a slower-than-expected pace in July with an increase of $10.44b reported<http://www.federalreserve.gov/releases/g19/current/g19.pdf>. The result missed expectations for an expansion of $12.5b and was the lowest level seen since May 2013. Following the pattern established in recent years, non-revolving credit, namely student and auto loans, did all of the heavy lifting while revolving credit, otherwise known as credit cards, fell unexpectedly by $1.84b.


Canadian building permits surged in July after plunging in June with an increase of 20.7% reported<http://www.statcan.gc.ca/daily-quotidien/130909/dq130909a-eng.pdf>. The figure was far stronger than both the 10.6% decline of June and expectations for an increase of 1.0% and was the largest month-on-month increase in percentage terms since May 2011.


European investor sentiment turned positive for the first time since May 2011 during September with the Sentix index<http://www.sentix.de/index.php/component/option,com_rokdownloads/Itemid,221/id,781/view,file/> rising to +6.5. The reading was well ahead of both the -4.9 reading of August and expectations for a rise to -2.8.


Greek industrial production plunged in July with a year-on-year contraction of 8.1% reported<http://www.statistics.gr/portal/page/portal/ESYE/BUCKET/A0503/PressReleases/A0503_DKT21_DT_MM_07_2013_01_P_EN.pdf>. The reading was well below the +0.6% reading of June and was the sharpest decline seen since March 2012. Complementing the weakness seen there, consumer price deflation<http://www.statistics.gr/portal/page/portal/ESYE/BUCKET/A0515/PressReleases/A0515_DKT87_DT_MM_08_2013_01_F_EN.pdf> accelerated in the year to August, declining 1.3% against expectations for a decrease of 0.9%.


Swiss unemployment held at 3.0% for a second-consecutive month in August. The reading was in line with market expectations and left total unemployed at 129,956 from 128,516 in July.  While that was largely expected, retail sales growth in the year July slowed sharply, declining to +0.8% from +2.3% in June.


Taiwan trade data for August came in mixed with exports continuing to expand while imports fell unexpectedly. Over the year exports rose +3.6%, above the +1.6% pace of July but below expectations for an increase of 3.9%, while imports remained weak, declining 1.2% against expectations for a rise of 4.99%. With exports growing while imports fell, the nation’s trade surplus expanded to $4.59b from $3.21b in July.


The Day Ahead (All times AEST)


The ASX 200 looks set to continue its move higher today with SPI futures pointing to a rise of 11pts on the open. Given we have major Chinese data released at 3.30pm and that it’s tended to beat of late, it’s highly likely that gains will accelerate towards the close in anticipation of further economic improvement.


As was always likely to be the case following good news from our two largest trading partners, the AUDUSD has continued its push higher overnight with the pair touching a high of .9241 before easing into the close. While we may see a bout of profit-taking in the early parts of trade, the pair tends to be whipsawed around by movements in the USDJPY each and every session, as is the case with equity markets, the release of Chinese data late in the session should see the Aussie pushing higher in anticipation of another strong bout of Chinese data. Support starts at .9220, .9200 and .9180 with resistance kicking in at .9241, .9254 and again at .9287-.9300.


The NAB business survey for August will be released this morning at 11.30am. It will be interesting to see whether recent improvements in the Chinese economy and likely election outcome (the survey was conducted before Saturday’s vote) will lead to a rise in conditions and confidence.


Chinese data dominates the regional data calendar today with industrial production, retail sales and fix-asset investment figures for August due out at 3.30pm. Economists are looking for industrial activity to rise 9.9% on year, above the 9.7% pace of July, with retail sales likely to hold at 13.2% for a second-consecutive month. Elsewhere the minutes of the Bank of Japan’s August monetary policy meeting will be released at 9.50am.


A quiet data calendar this evening with Canadian housing starts, Italian Q2 GDP (final), French consumer confidence and Indian trade figures for August the only releases of note.


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