Wall Street stocks rebound after Fed minutes

Thursday, July 10, 2014

After a tentative few sessions Wall Street stocks lifted higher yesterday, as details from the Fed minutes calmed market participants and sparked renewed appetite in risk assets. The minutes of June’s FOMC meeting released yesterday signalled that the Fed was in no rush to increase rates even as tapering of QE held at a steady $10bn per month and policymakers were planning an exit to loose monetary policy. The encouraging comments saw investors who had previously been adopting a wait-and-see approach jump back into equities as both the S&P 500 and DJIA rallied just under 0.5% higher after paring gains from recent record highs throughout the start of the week.

Chinese stocks headed lower for a second consecutive session as trade data came in weaker than expected. Exports rose 7.2% y/y in June building on the previous month’s 7.0% y/y increase, however, export growth missed expectations of a 10.4% increase in June. Import growth also trailed estimates, gaining 5.5% y/y in June against expectations of a 6.0% increase. While import growth had rebounded from -1.6% y/y the previous month, market participants view the reliance of external demand as over emphasised and increasingly the import figures will be of greater importance and provide a crucial insight into China’s growth trajectory.

Comments made by BOE official Nemat Shafik yesterday bolstered the positive UK outlook as emphasis on the rapid pace of recovery and increasing output continued to fuel speculation of an earlier than expected rates rise. Despite the weaker than expected manufacturing output and industrial production in May indicated by data released on Monday, the employment market has improved significantly as Shafik outlined that slack in the economy was shrinking and firms were closing in on spare capacity. With the MPC widely expected to keep the base rate unchanged at today’s policy meeting investors will look towards inflation data due out next week for further insight into potential action.

S&P 500 rebounds after Fed minutes

SPX Index SP 500 Index 2014 07 10 08 51 16

Chinese export growth improves but misses estimate

CNFREXPY Index China Export Tra 2014 07 10 08 07 32 

Events for today

0230

CN

Jun

Imports & Exports

0001

UK

Jun

RICS House Prices

0930

UK

May

Trade Bal & Non EU

1200

UK

Jul

BoE Rate

1330

US

w/e

Jobless Claims

1500

US

May

Wholesale Inventories

1530

US

w/e

EIA Nat Gas

 

 

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