Thungen Financial May 13th 2014 - Global Market and Economic Update
It was a notably a good start to the week yesterday for the majority of the markets. With a host of economic data due this week from all the key economies this week should be busy with data and news.
Asian markets have had a good start to the week. With the main indexes posting gains and a general sense of positivity in the region there is hope that the bourses will remain in good fashion even though yet again Chinese economic data came in under forecast. Today we were provided with several key indicators out of China, Industrial Output, Retail Sales and Fixed Asset Investment. Industrial Output is always used as a direct measure of the economy as a whole and despite coming in just under forecast the results were significant. Up 8.7% on the previous year's figures the data just missed the forecast of 8.9%. Retail Sales data was slightly further adrift, coming in at 11.9% against a forecasted 12.2% and finally Fixed Asset Investment for January to April was up at 17.3% as opposed to a forecasted 17.7%. The upshot is that although China is missing its targets, albeit marginally, they are still performing well especially as the government is attempting to curb the amount of excess credit in the financial system and looking to level out its sporadic property market. We have to wait until Friday for further data out of China whereby we will see the Foreign Direct Investment figures which are expected to be marginally better that the year before.
Asian Markets as of 13th May 2014:
Nikkei 14,425.44 +1.95% SSE Comp. 2,052.87 +2.08%
Hang Seng 22,320.06 +0.26% ASX 5,475.40 +0.85%
European Markets opened higher after a good day on Monday which would have surprised many. At the weekend the pro-Russia separatists voted for exclusion from the Ukraine Government and looked to Russia to integrate or annex them as per Crimea. Although President Putin had stated he felt the voting shouldn't have taken place, just yet, the result showed that the majority of people living in the east of the country would prefer to return to Russia control. Seen as an illegal vote by the US, EU and Ukraine it does however add some clarity to the feelings of the people in the region and surely that result needs to be taken into consideration to some extent. In an attempt to further diffuse the situation Germany Foreign Minister Frank-Walter Steinmeier is visiting Kiev today to discuss the crisis after the weekend vote. The OSCE, Organisation for Security and Co-Operation in Europe is meeting there to establish a way forward after two of the regions in turmoil voted to be returned to Russian Control. Donetsk one of the main areas of dissent saw 89% vote to establish a Russian province and Luhansk did the same with a 96% vote. Separatist leaders in the area have asked Moscow to acknowledge the vote and implement a response similar to Crimea however Moscow currently states that they are looking to a peaceful resolution as opposed to a military response of the like that happened in Crimea earlier this year.
European Markets as of 13th May 2014
FTSE 6,871.12 +0.28% Dax 9,754.31 +0.53%
CAC40 4,503.23 +0.21% BEL20 3,170.59 +0.21%
Zurich SMI 8,552.86 +0.09% MICEX 1,374.73 +0.23%
US markets had an exceptional day yesterday with two of its main indexes closing on record highs. Both the S&P 500 and the Dow Jones closed in record territory ahead of a very busy week for economic data and earnings reports. What may have spurned the markets further was the report that the US deficit was approaching its lowest since 2008. Although the deficit is usually lower in April due to individual and corporate quarterly tax payments the results were still encouraging. Estimated to be down to $492bn for 2014 this is drastically lower than what was reported before, however it can be noted that after 2015 the deficit is set to grow substantially and by 2023 will be consistently over $1tn due to the governments benefits program of Social Security and the new Medicare package. The reason behind the vast increase is because the baby booming generation is set to start retiring and will no doubt start placing larger demands on the government's coffers. This week see's the next round of indicators from the US starting with Retail Sales and Export and Import data today, US Producer Price Index on Wednesday and the Consumer Price Index for April on Thursday.
US Markets as of 13th May 2014
S&P500 1,896.65 +0.68% Dow Jones 16,695.47 +0.68%
NASDAQ 4,143.86 -1.77%
It is fair to expect the run to continue today and for the majority of the week as the correction seen last week provides value in the markets and the general Global economic state continues to be improving steadily.
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DISCLAIMER The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Thungen Financial Advisors. All market data within this release is for your general information and enjoys indicative status only. Thungen Financial Advisors does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.