Tuesday, 12 May 2015

Daily Market Analysis 12.05.2015

On Monday, global equities markets were mixed. Results were influenced by the positive US employment report and the People’s Bank of China's move to lower its one year benchmark rate by 25 basis points to 5.10%.

At the London afternoon fixing, gold rose $3.25 to $1189.25, and copper futures were down 0.5% to reach $2.91. In oil, Dated Brent spot crude dropped $0.61 to reach $64.78. WTI spot crude inched down $0.22 to reach $59.17.

The Dollar Index decreased 0.2% as the USD increased relative to the EUR, JPY, CHF, CAD and AUD. However, it retreated against the GBP.

United States Equities
Stocks in the US market moved lower as energy stocks were affected by retreating oil prices. Caution against Greece's economic future also sapped investor appetite for risk. The Dow Jones industrials depreciated 0.5%, the S&P decreased 0.4% and the Nasdaq edged down 0.1%.

QEP Resources, Murphy Oil and National Oilwell Varco all decreased. Noble Energy will be buying Rosetta Resources for approximately $2.1 billion in stock. The agreement will provide Noble Energy with two Texas shale formations which will boost earnings. Dean Foods and Actavis finished higher in response to better than expected quarterly results.

European Equities
Over in Europe, equities markets were mixed in response to lingering uncertainty surrounding Greece's financial status. On Monday, Greece paid approximately €750 million to the International Monetary Fund (IMF). Notwithstanding the payment, Greece's economic status remains shaky until it can secure funding from creditors. The Bank of England left its key record low interest rate at 0.5% and the size of the quantitative easing unchanged at £375 billion. The London FTSE and Spanish Ibex both advanced 0.2%. The German DAX edged down 0.3% while the Swiss SMI added 0.3%. The French CAC lost 1.2% and the Italian MIB remained virtually unchanged.

In terms of individual stocks, Volkswagen, Daimler and BMW edged down. Deutsche Lufthansa, Deutsche Bank and Commerzbank climbed. Airbus retreated after an A400M military transport aircraft crashed near the Seville airport in Spain shortly after takeoff. Royal Mail advanced. Anglo American, BHP Billiton and Glencore gained in response to further Chinese stimulus measures.

Asia Pacific Equities
Equities markets in the Asia Pacific region were mixed. China cut interest rates for a third time within 6 months in order to boost lending to businesses and boost a weakening economy. The last interest rate slash occurred in November, the first time in over two years. In China, the Shanghai Composite advanced 1.56%, while in Hong Kong the Hang Seng index dropped 1.12%.

In Japan, the Nikkei added 0.02%. Toshiba Corp dropped 5.4% after the company withdrew its earning guidance due to accounting problems revealed by internal investigations. Taiyo Yuden lost 9.6% after March profits came in below expectations. Suzuki Motor rose 5% after the company announced that it expects record profits for the current financial year.

In Australia, the S&P/ASX and All Ordinaries added 0.9% and 0.8% respectively.

Macro Themes and Looking Ahead

Australia will be posting March home loans. The US will report March industrial production. In the US, March JOLTS and April NFIB small business optimism index will be released along with the April Treasury budget.

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