Strong Chinese data increases risk appetite

Friday, June 13, 2014

China’s retail sales surged by 12.5% y/y in May, beating analysts’ expectations of a 12.1% rise. Industrial production also rose by 8.8% y/y in May, in line with estimates, while urban investment climbed higher by 17.2% y/y in May. The robust Chinese indicators spread optimism across the global equity and commodity markets, showing signs of steady recovery of the Chinese economy. The Hang Seng index surged more than 170 points (+0.75%), while the Nikkei climbed higher by 0.85%. The JPY rebounded from yesterday’s losses and corrected higher towards 102.00.

China's Retail Sales

CNRSCYOY Index (China Retail Sal 2014-06-13 08-56-18

 

The US equity markets extended losses yesterday as fairly tepid US employment data weighed on market sentiment, while on-going concerns about the tentative conditions in Iraq caused further uncertainty in the US markets, limiting risk appetite. The Dow Jones index plunged more than 100 points yesterday (-0.65%), while the S&P 500 index was down at the 1930 level after retreating 0.71%. The USD weakened further, providing support to base metal and crude oil prices.  

Dow Jones Index

INDU Index (Dow Jones Industrial 2014-06-13 08-56-55

 

German CPI inflation data fell by 0.1% in May, in line with analysts’ expectations. The main focus for today’s trading session will turn to the release of Eurozone’s employment for Q1 2014 as well as US PPI inflation figures and the results from the University of Michigan/Thomson Reuters survey.

The EUR managed to hold support at 1.35, remaining under pressure following the recent interest rate cut at the latest ECB meeting. The European currency plunged to a fresh 18-month low against Sterling and had also lost ground against the JPY.   

EURGBP Spot

EURGBP Curncy 2 (EUR-GBP X-RATE)   2014-06-13 08-19-42

 

Energy: Brent front month futures climbed strongly to reach a nine-month high, trading above $114 per barrel, as supply disruption concerns dominated the oil market after the US threatened military action in Iraq against Sunni militants who are pushing on towards the key area of Baghdad. The WTI front month contract has also climbed above $107 per barrel.

Brent Front Month Futures rally above $114 per barrel

CON4 Comdty (BRENT CRUDE FUTR  J 2014-06-13 08-55-32

 

Events for today:

 

0245

CN

May

Retail Sales

0245

CN

May

Industrial Production

0700

DE

May

CPI Final

1000

EZ

Q1

Employment

1330

US

May

PPI final

1455

US

Jun

Michigan Survey

 

All times UK Local Time

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