Daily Market Update 2 December 2013 - December begins with a data dump
China manufacturing PMI held steady at 51.4 in November. The figure beat expectations for a decline to 51.1 with improvements in output, export orders and inventories offset by weaker domestic orders and backlogs.
Better news out of the Eurozone on Friday with unemployment falling unexpectedly while inflationary pressures ticked higher. Unemployment came in at 12.1% in October, below the all-time record high of 12.2% struck in September while the annual inflation rate rose 0.2% to +0.9% in November having fallen in the previous four months.
While they might have diverging levels of consumer confidence at present, Germany and France both recorded disappointing household-related expenditure figures on Friday. In Germany retail sales slipped 0.8%, below the upwardly-revised 0.2% decline of September and expectations for an increase of 0.5%, with the annualised rate slipping into negative territory at -0.2%. Mirroring that disappointing outcome, French consumer spending fell 0.2%, the third-straight monthly decline recorded, with the reading well below the 0.2% increase that had been expected by economists. Despite the big miss, with stronger data rolling off the series, the annual rate held at -0.1% for a second-consecutive month.
Italian unemployment held steady at 12.5% for a second-consecutive month in October. While overall unemployment was unchanged, youth unemployment, those persons aged 15-24 years, rose to 41.2%, another fresh all-time record high.
Italian consumer prices continued to contract in November with a fall of 0.4% reported. The figure doubled the 0.2% decline recorded in October and was well below expectations for a fall of 0.1% and left the annualised rate at +0.6%, the lowest level seen since October 2009.
Mirroring the performance of consumer prices, French and Italian producer prices slid in October with declines of 0.2% and 1.3% reported. The falls left the annual contractions at -1.4% and -2.7% respectively, the lowest levels seen since November 2009.
Greek retail sales improved (of sorts) in September with an annualised decrease of 6.4% reported. The figure bettered the -8.9% pace seen in August and was the smallest decline recorded since May this year.
UK house prices continued to push north in November with the Nationwide house price index rising by a further +0.6%. The figure was in line with market expectations and left the annualised increase at a 40-month high of +6.5%.
UK credit demand missed expectations in October with mortgage lending and approvals, along with consumer credit, missing on the downside. Mortgage lending rose by £1.2b, below the £1.3b increase expected, while approvals came in at 67.7k, below the 68.5k pace expected. Mirroring the performance seen there, consumer credit also disappointed, increasing by £500m against expectations for an expansion of £700m.
Canada GDP exceeded forecasts for September with a rise of 0.3% reported. The reading, the same pace seen in August, best expectations for an increase of 0.2% and left the year-on-year rate at a 15-month high of 2.3%.
India GDP exceeded expectations in Q3 with an annualised expansion of 4.8% recorded. The figure was above the +4.4% rate seen in Q2 and beat expectations for an increase to +4.6%.
South Korea’s trade surplus shrunk fractionally in November with a decrease to $4.804m reported. While below the $4.899m surplus of October, the figure beat expectations for a decline to $4.55m. From a year earlier exports grew just 0.2%, down from the 7.3% increase of October, while imports slid 0.6% after printing at +5.1% previously.
The Day Ahead (All times AEDT)
The ASX 200 looks set to start the new month in the black despite SPI futures pointing to a fall of 9pts on the open with the Chinese manufacturing PMI ‘beat’ over the weekend expected to help the materials and mining-related sectors. Couple this with the indices good track record in December, it’s risen in 6 of the past 8 years with the average increase 3.65%, and it appears unlikely that it’ll finish in the red in the absence of unexpected bearish news during today’s session.
The AUDUSD has opened the new month modestly higher following positive Chinese data released over the weekend with the pair currently buying .9130. With a raft of domestic data released during today’s session, along with HSBC’s China manufacturing PMI gauge at 12.45pm, it’s likely that data flow will dictate the path of the pair over today’s Asian session. Support is found at .9114, .9103 and at .9092 with resistance kicking in between .9141-49 and again at .9196.
A plethora of domestic data releases arrives today with the AIG PMI, TD inflation gauge, RPdata/Rismark house price index, building approvals, RBA commodity price index along with Q3 company profits and inventories all scheduled for release. On the regional front we’ll also receive manufacturing PMI figures from China and South Korea, Japanese Q3 CAPEX, New Zealand Q3 terms of trade and South Korean CPI.
As will be the case in Asia, manufacturing activity reads dominate the economic calendar this evening with a raft of figures arriving from Europe, the UK and US. Elsewhere we’ll also get construction spending from the US along with the Halifax house price index from the UK.