Markets await eurozone GDP as Bank of Japan disappoints - business live

Discussion in 'Market News' started by Lily, Jul 29, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    9.40am BST

    In the weeks leading up to the EU referendum, UK mortgage approvals fell to their lowest level since May 2015.

    But lending to consumers rose at its fastest pace for nearly 11 years, according to new Bank of England figures.

    9.11am BST

    German retail sales for June seemed to have held up in the run-up to the UK’s referendum. Reuters reports:

    German retail sales fell by 0.1 percent on the month in June but a stronger-than-forecast yearly rise suggested consumer spending, which is expected to drive growth this year, remains a pillar of support for the economy as foreign trade weakens.

    The volatile indicator, which is often subject to revision, was in line with expectations in a Reuters poll for a 0.1 percent monthly drop, data from the Federal Statistics Office showed on Friday.

    9.09am BST

    France’s economy could weaken further after the Brexit vote, says ING economist Julien Manceaux:

    French GDP growth slowed to 0.0% in the second quarter. This is in line with expectations that first quarter’s consumption rebound could not last without more signs of higher employment growth. Government actions to boost corporate investment seem to have been less effective in the second quarter while net exports remained the weak spot of the French economy. If employment growth fails to accelerate, the risks materializing from the Brexit shock could lead to further weaknesses in the second half of this year.

    ...It should be noted that the US and the UK were large contributors to growth last year, which helped limiting the negative net export growth contribution of 2015 to -0.3%. With the Brexit risk materializing and a weaker US dollar, this position will probably deteriorate further in the second half of the year.

    After the Brexit shock, we have revised our GDP growth forecast downwards to 1.4% in 2016 after 1.2% in 2015, and to 1.1% in 2017. With no room for manoeuvre left as far as reforms are concerned, the French economy can only count upon the stimulus added by recent policies (lowering labour costs and giving investment tax breaks). We think this will not be enough to secure a stronger recovery path before the 2017 Presidential election, especially if employment growth does not accelerate strongly in the near term.

    Once again, Spanish figures remain strong and GDP growth rate of 3.2% year on year leaves Spain as a solid leader among large Eurozone countries.

    Looking at the economic situation, nearly everything seems to continue in the right direction...While the detail about GDP components is not available yet, we suspect consumption to be at the heart of the recovery, as households still benefited from the same cocktail of rising real earnings, decreasing unemployment and rebounding housing prices. The second good news of today is that the inflation rate continues to move towards the positive territory. The harmonized CPI went progressively from -1.2% year on year in April to -0.9% in June and -0.6% in July.

    Looking at the political situation, nearly everything seems to go wrong. After two election rounds, no concrete solution is on the table and even if Rajoy would like to see a government in the beginning of August, it seems unlikely.

    All in all, political turmoil has barely scratched GDP growth and job creation in the first semester and Spain has appeared more resilient than expected. The effect of Brexit and national political uncertainty can still suddenly come into play but with current tailwinds, GDP growth in 2016 is set to hover around 3%. However until the end of the year, slippages are possible, caused by political events be it in Barcelona or in Madrid.

    8.48am BST

    The French GDP figures could be a bad omen for the forthcoming eurozone GDP figures, says Capital Economics:

    Stagnation in France's GDP in Q2 largely down to slower h'hold spending & suggests EZ Q2 GDP (10am BST) also weak.

    8.41am BST

    Another warning about the UK property market - London in particular - in the wake of the Brexit vote, this time from estate agency Foxtons.

    Related: Foxtons profits down sharply as London property market cools

    8.34am BST

    Despite a second election in six months during the second quarter, Spain’s economy still managed to show steady growth.

    Spain’s GDP rose by 0.7% quarter on quarter between April and June, in line with expectations and up 3.2% year on year.

    Spanish GDP (QoQ) Q2 P: 0.7% (est 0.70%; prev 0.80%)
    -GDP (YoY) Q2 P: 3.20% (est 3.10%; prev 3.40%)

    8.13am BST

    Contrary to expectations, the FTSE 100 has fallen in early trading, down 14 points or 0.2%.

    Barclays is leading the risers, up 4% after its results while British Airways owner International Airlines Group is down nearly 2% after it reported a lower than expected 4.7% rise in second quarter profit and said it no longer expected to grow 2016 profits by €900m as it had forecast in February.

    8.05am BST

    Ahead of the eurozone GDP figures, Unicredit analysts say they expect a modest expansion in the second quarter:

    After a strong first quarter, GDP growth likely weakened in the second quarter of 2016: we forecast +0.3% quarter on quarter, with risks tilted to the downside. Hard data suggest that private consumption and construction investment slowed substantially, while the trade channel is unlikely to have picked up the slack. On the output side, industrial production lost traction.

    7.53am BST

    Back to the French GDP numbers, and in volume terms growth was flat in the second quarter after a 0.7% rise in the previous three months. Household expenditure fell sharply from 1.2% to flat, while imports dropped by 1.3% and exports declined by 0.3%.

    Year on year, GDP grew by 1.4% compared to 1.3% previously but below forecasts of a 1.6% increase.

    French GDP Q/Q (Q2 A) 0.0% versus +0.2% expected, previous +0.6% revised +0.7% | GDP Y/Y (Q2 A) +1.4% versus +1.6% expected, previous +1.3%

    7.37am BST

    Here are the forecasts for the European market open.

    Our European opening calls:$FTSE 6734 up 12
    $DAX 10336 up 61
    $CAC 4447 up 27$IBEX 8526 up 47$MIB 16618 up 95

    7.35am BST

    Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

    The eurozone economy will be in the spotlight today with growth figures for the second quarter - the run up to the UK’s Brexit vote - expected to show a slowdown. But bear in mind that UK second quarter GDP ended up being better than forecasts despite the concerns about the referendum.

    Not quite what traders were looking for...#BOJ disappoints and markets react: #USDJPY down 2% #Nikkei down 1.1%

    Related: Bank of Japan blames Brexit as it unleashes more monetary stimulus

    The Bank of Japan has eased policy but it hasn’t impressed markets...The Japanese yen has rallied against every major currency following the BOJ announcement, taking USD/JPY down 200 pips to 103. Further declines for another test of the key 100 level appear likely. It was a missed opportunity for the BOJ to have done more at its first meeting after Prime Minister Abe was re-elected with a new mandate to expand Abenomics.

    Even the Japanese stock market, which is the single biggest beneficiary of the policy change saw shares drop, with the Nikkei choppy before falling nearly 1%. The shift into the yen, typically perceived as a haven asset will have repercussions on demand for risky assets including European stocks.

    SuperFriday! Lots of very important data coming from Europe tomorrow. {BI ECON} on the terminal for timely analysis.

    In Q2 2016, French GDP levelled off: In Q2 2016, GDP in volume terms* was stable : 0.0% after +0,7% in Q1.

    Related: Hinkley Point C in doubt after British government delays approval

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