Weak Chinese Services PMI data weigh on market sentiment

Thursday, June 05, 2014

China’s HSBC Services PMI fell to 50.7 in May compared to 51.4 in April, hitting a 4-month low. However, the data managed to remain above the 50-point level. The fairly disappointing PMI data contrasted with other recent strong manufacturing PMI economic indicators which showed signs of stabilisation in the Chinese economy. Asian equity markets consolidated within the recent range. The Nikkei edged higher trading above the 15070 points, while the Hang Seng slid slightly lower (-0.12), following the fairly modest PMI figure. The JPY posted renewed losses trading towards 102.50.

China's HSBC Services PMI 

MPMICNSA Index (HSBC China Servi 2014-06-05 09-00-09

German industrial orders surged by 3.1% in April beating expectations of a modest 1.3% rise. The euro held above 1.36, while the main focus in today’s trading session has switched to the European Central Bank meeting with the key release of its interest rate decision.

In the UK, data from Halifax indicated house prices rose by 8.7% y/y in May, beating estimates of a 7.4% increase and showing that housing demand is still strong (+3.9% m/m rise). Sterling climbed higher against the USD, trading at 1.23 following the robust housing data.

UK Halifax House Prices Chart over 15 years 

UKHB3MYR Index (UK HBOS House Pr 2014-06-05 09-01-13

Gold was fairly unchanged near a four-month low but faced a possible risk of more sharp declines if the European Central Bank meets expectations to cut interest rates, a move that could strengthen the USD, add pressure to the EUR and possibly hurting bullion.

Energy: Brent front month futures retreated sharply to a three-week low at $108 per barrel yesterday as tensions over Ukraine eased, while high oil supplies in the US also dragged down prices. The release of the weekly EIA oil inventories report showed an unexpected drop of 3.43 million barrels in crude stocks, while gasoline and distillate stocks rose by 210,000 barrels and 2.1 million barrels, respectively.

Brent Front Month down to $108/barrel

CO1 Comdty (Generic 1st 'CO' Fut 2014-06-05 09-01-59

 

Events for today:

 

0245

CN

May

HSBC Services PMI

0700

DE

Apr

Industrial orders

0800

UK

May

Halifax House Prices

1000

EZ

Apr

Retail Sales

1200

UK

Jun

BoE Rate

1230

US

May

Challenger Layoffs

1245

EZ

Jun

ECB Rate

1330

US

w/e

Jobless Claims

1530

US

w/e

EIA Nat Gas

 

 

All times UK Local Time

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