Daily Market Update 11 February 2014 - Markets calm, all eyes now on Yellen
Following on from the weak trend established on Friday, European industrial production continued to underwhelm overnight with France and Italy reporting December figures that missed badly to the downside. French production contracted 0.3%, below the 0.2% decline expected by economists and the downwardly-revised 1.2% increase of November, with the year-on-year rate falling to a two month low of +0.5%. Doubling up on the bad news, Italian production fared even worse, declining 0.9% against expectations for flat growth during the month. The result was well below the 0.3% increase seen in November with the annual rate, after adjustments for workdays, slipping back into negative territory at -0.7%. While those readings were weak, there was better news elsewhere, from Greece no less, with an annual increase of 0.5% reported. The reading was far stronger than the 6.1% contraction recorded in November and was the first time since June last year that an expansion had been recorded.
Eurozone investor confidence surged in February with the Sentix investor survey rising to 13.3. The figure was higher than both the 11.9 reading of January and expectations for a decline to 10.1 with the index now sitting at the highest level seen since April 2011.
French business sentiment held steady in January with the Bank of France survey coming in at 99. The figure was in line with the downwardly-revised reading of December but below expectations for an increase to 101.
Canada housing starts rose less-than-expected during January with a decline to 180.2k reported. The figure was below the 187.1k pace seen in December and expectations for a decline to 185k with the pace of starts now at the lowest level seen since April 2013.
The Day Ahead (All times AEDT)
A quiet start is expected for the ASX 200 this morning with SPI futures pointing to a rise of 1pt on the open. As is usually the case with no firm lead from Wall Street, it’s likely that the index will meander in the early parts of trade until Chinese markets get underway at 12.30pm this afternoon. On the earnings front, look out for reports from Cochlear and Bradken during today’s session.
An uneventful session for the AUDUSD overnight with the pair pushing down towards the .8900 level before retracing higher in North American trade. Today we expect the pair will be well supported before the release of local data at 11.30am with the subsequent price action likely to be determined by the strength of how they print. Support is found at .8940, .8923 and again at .8907 with resistance kicking in at .8950, .8980 and at .8999.
A swathe of local data for markets to digest today with lending finance commitments for December, the NAB business survey for January and Q4 house price index all scheduled for release. On the finance front economists expect the number of home loans to have risen by 0.7% in December, a result that will be slightly below the 1.1% pace of November if realised. Given it has attracted plenty of attention lately, expect the investment lending figure to be as equally scrutinised as the headline data itself. Moving on to the business survey from NAB, most attention will be on the business conditions index with many, us included, interested to see whether the sharp bounce of December can be maintained in January. Last but not least, the house price index is expected to show a 3.0% increase in capital city prices in the three months to December, a result that would leave the annual change at +7.6%.
Janet Yellen, Chair of the US Federal Reserve, delivers her maiden monetary policy report to the US House Financial Services Committee this evening in Washington. For those with an interest, her testimony gets underway at 12.30am. While that event will dominate all others, Charles Plosser, voting member of the FOMC this year, will speak on the US economic outlook from 1am tomorrow morning.
Very little on the economic calendar this evening with US wholesale inventories and sales along with the NFIB Small Business survey the only releases of note.