Morning Markets: Frankfurt calling
Watchlist
- UK: Retail sales (0830 GMT)
- Eurozone: European Central Bank announcement (1145 GMT)
- Eurozone: ECB press conference (1230 GMT)
- US: Philadelphia Fed manufacturing index (1230 GMT)
In Europe, while Brexit negotiations are ongoing, Morgan Stanley has decided to move its trading hub to Frankfurt, Bloomberg reports. It is the latest such step by a major financial institution that picks the German financial centre as a hub after seeing itself urged to leave London after Brexit.
In the US, Republicans are still working hard to agree on a new healthcare plan to replace Obamacare. Late-night meetings, however, did not lead to a result.
The European Central Bank will clearly be in focus today. No changes are expected for interest rates in today’s policy update, but the market will be listening closely for clues about how and when the ECB plans to begin the process of tapering its super-accommodative monetary stance.
Meanwhile, the economic recovery remains intact, suggesting that the ECB is under pressure to start adopting a slightly more hawkish approach to monetary policy at some point in the near future. The Eurozone composite PMI in July, for instance, points to another solid quarterly increase for the second-quarter GDP report that’s scheduled for release next month.
In the UK, concern about weaker growth is expected to ease via today’s monthly update on retail sales. TradingEconomics.com’s consensus forecast sees spending rebounding by 0.4% in June after a 1.2% slide in May. The bounce is on track to translate to a firmer year-on-year increase of 2.6% following a worrisome dip to a sluggish 0.9% annual rise in May.
Just after the ECB announcement, the Philadelphia Fed manufacturing index is due. The New York Fed’s index of manufacturing activity in the bank’s region fell more than expected in July. Although it’s still in positive territory, the benchmark’s sharp retreat suggests that the sector generally faces stronger headwinds at the start of the third quarter.
Economists expect that the Philly Fed’s regional benchmark will fall to 22 in July from 27.6 previously, based on Econoday.com’s consensus forecast. That’s still a strong number, however, and the projection puts this index in the lead among its regional counterparts.
Market signals
Asian session
- Asian Development Bank upgraded its emerging Asia GDP forecast to 5.9% in 2017
- China's upgraded forecast of 6.7% growth is behind the higher regional figure
- WTI hit a six-week high on low inventories and a drop in Saudi oil shipments to the US
- Bank of Japan kept interest rates unchanged today, as expected
- BoJ lowered its inflation forecast for this fiscal year from 1.4% to just 1.1%
- Nikkei 225 added to Wednesday's gain; it was up 0.59% to 201,139.50 at 0457 GMT
- Hang Seng rebounded from an early fall; it was up 0.25% to 26,739.40 at 0516 GMT
- China's Shanghai Composite was up 0.20% to 3,237.49 at 0514 GMT
- Banks pushed Australia's S&P/ASX200 higher; it was up 0.53% to 5,762.60 at 0519 GMT
- Australia's jobless came in at 5.6% for June, after nine months of jobs growth
- Today's ECB announcement and press conference will attract attention
Forex ahead
- Upbeat jobs data gave the lofty AUD another lift; it was worth 0.7938 at 0513GMT
- USD regained some ground against the yen; it was worth just ¥112.1150 at 0514 GMT
In opinion
1...2...3
While June should show a rebound in retail spending in the UK, rising inflation and slow wage growth mean the trend can't last, stoking fears of slowing growth, warns James Picerno.
Ore rebound
Rising spot iron ore prices, helped by higher steel prices in China, is good news for Australian miners, says the Sydney-based team Saxo Capital Markets Australia.
Crude lift
Higher crude prices gave the Norwegian krone a lift; it was the second best performer among the G10 currencies, says the team at Saxo APAC sales trading.
Morning Markets goes out on the TradingFloor platform at 0700 GMT, Monday to Friday.
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