Daily Market Update 23 January 2014 - China’s economy back in focus today
UK unemployment fell more-than-expected in November with a decline of 0.2% to 7.1% reported. The figure was below both the 7.4% rate of October and expectations for a fall to 7.3% with the reading now at the lowest level seen March 2009. Approximately 280k new jobs were created in the three months to November, a result that was above the 256k pace expected by the markets, with that figure also at the highest level seen since July 2010. While not as strong as the data seen there, unemployment benefit claims also fell, dropping by a further 24k after declining 34.3k in November. While below the 32k decline expected by the markets, the fall was the fourteenth consecutive month that a decrease had been reported.
The minutes of the Bank of England’s MPC December meeting were released overnight with members once again voting unanimously to keep the key bank rate and gilt purchase program steady at 0.5% and £375m respectively. To view the document in full, click here.
Eurozone public sector debt-to-GDP fell in Q3 2013, largely as a result of currency effects, with a decline to 92.7% reported. The figure was below the 93.4% rate recorded in Q2 2013 but above the 92.0% ratio recorded in Q3 2012. As usual, Greece, Portugal and Ireland recorded the highest debt-to-GDP ratios, all in excess of 124%, with Luxembourg, Cyprus and Greece recording the heftiest quarter-on-quarter increases from Q2. On the flip side, Portugal, Finland, Belgium and Germany recorded the largest declines with all four seeing their ratios decline by 1.4% or greater. To read the report in full, please click here.
Spain’s trade deficit swelled in November with an increase to €1.76b reported. The figure was higher than the €1.36b deficit recorded in October but well below the €2.59b figure recorded in September 2013. From a year earlier exports fell by 2.2% to €19.32b while imports slipped by a lesser margin, -0.4%, to €21.08b.
The Day Ahead (All times AEDT)
The ASX 200 looks set to add to yesterday’s losses today with SPI futures pointing to a fall of 22pts on the open. Things to look out for today include the opening of Chinese money markets just after 12pm, particularly any additional liquidity operations from the PBoC, along with the Chinese manufacturing ‘flash’ PMI print from HSBC/Markit at 12.45pm. If the pattern of recent days is continued, that of short-term liquidity being pumped into Chinese money markets helping to put a bid in equities, and the PMI come in at-or-above expectations, it wouldn’t shock to see our index move higher in the latter parts of trade.
The AUDUSD has fallen back overnight after touching a high of .8888 in European trade with the pair currently fetching .8849. With no major domestic data to drive direction, we expect the Chinese manufacturing PMI reading will be most influential on the pair today. Should we get a reading at-or-above the 50.5 figure of December, expect the Aussie to move higher with an attempt on the .8900 level likely. Conversely, should the figure come out below 50.5, markets are expecting 50.3, expect the pair to sink lower with a test of .8838 a near-certainty.
Consumer inflation expectations for January will be released at 11am this morning. On the regional front, we’ll get the latest flash manufacturing PMI print from China, always a market mover, South Korean Q4 GDP, the BoJ’s latest monthly economic update along with job ads, manufacturing PMI and consumer confidence figures from New Zealand.
Data releases this evening include initial jobless claims, house price index, leading index, existing home sales, Chicago Fed national activity index along with the Kansas City Fed manufacturing survey from the States, flash services and manufacturing PMI readings from the Eurozone, Germany and France, current account and consumer confidence data from the Eurozone, UK retail turnover, Spanish unemployment, Canada retail sales along with French manufacturing confidence.
McDonalds and Microsoft headline the US Q4 earnings calendar this evening.