Equities edge higher ahead of the FOMC meeting

Tuesday, June 17, 2014

European equity markets rebounded and edged higher today, as stronger than expected economic data from the Eurozone improved market sentiment, bringing back risk appetite. The CAC, DAX, IBEX and the London equity benchmark gained between 0.2% and 0.6%, while US equities remained within the recent range struggling for direction ahead of the US Fed meeting tomorrow.

UK CPI data - Inflation

UKRPCJYR Index (UK CPI EU Harmon 2014-06-17 17-09-18

On the macroeconomic front, UK inflation fell to 1.5% in May compared to 1.8% in April, hitting a 4½ year low. However, data from ONS showed UK house prices surged by 9.9% in the year to April, their biggest annual increase since June 2010.  Sterling consolidated around 1.696 against the US dollar but edged higher trading above 1.25 against the euro.

GBPEUR Spot

GBPEUR Curncy (GBP-EUR X-RATE)  2014-06-17 17-08-39

In Germany, the results from the ZEW economic survey were below analysts’ expectations. German economic sentiment declined to 29.8 in June compared to 34.4 in May, while current market conditions were slightly better at 67.7 in June, beating estimates of 62.6. Following the release of the tepid German economic data, the euro reversed and slid slightly lower against the US dollar, trading around the 1.35 level.

In the US, Core CPI rose 2.1% y/y in May, fairly in line with expectations, but house starts declined unexpectedly by 6.5% in May. Investors will be keeping an eye on the releases of the crucial FOMC meeting tomorrow, which could provide further direction across equity and commodity markets.

Base metal prices climbed higher today, as Copper retested the $6,700 area, while nickel and Zinc rose more than 0.9% and 2.5%, respectively. Silver remained fairly unchanged at $19.6, while Gold traded within the recent range of $1250-$1270.

LME Copper 3M

LMCADS03 Comdty (LME COPPER    3 2014-06-17 17-08-19   

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