Morning Update – 01/06/2017 – by Arjun Lakhanpal
June 1, 2017Morning all.. Wall St closed around unchanged again after early losses were recovered but Japan had a better night as strong data saw the Nikkei rally almost 1%. The rally after capital spending topped estimates and a beat in PMI data. However Chinese stocks suffered and so did the AUD after some poor Chinese data showed a private guage of China’s manufacturing fell below 50, suggesting contraction. Following China’s slightly better than expected PMI number yesterday, the Caixin PMI manufacturing number fell to 49.6 (vs 50.1 consensus) with most of the sub-indexes lower too. Commodities also taking varying paths overnight, as Iron ore trades down over 4% whilst oil is up 1%. API data late yesterday certainly helping oil bounce off its 2 week lows, showing that US inventories fell by 8.67 million barrels last week. GBP under a bit of pressure this morning following last night’s TV debate where Theresa May got Amber Rudd to take her place whilst Jeremy Corbyn decided last minute to make an appearance. A late Times/YouGov poll also getting a lot of attention in the press as it showed just a 3% gap (Cons 42%, Labour 39%). In cable 1.2798-1.2775 marks the support level to watch.. Elsewhere in the news, Fed’s Williams (moderate, non-voter) said he sees a total of three rate rises for this year, but views four hikes as also being appropriate in the right circumstances but US yields took little notice of this and the 10yr sits at just above 2.21% and is clearly capping the dollar still. A busy day ahead and this morning we get Manufacturing PMI data across Europe starting with Sweden and including the UK. We have a host of important data from the US this afternoon in front of Non-farm payroll tomorrow so a busy finish to the week. Good luck.
