The Institute for Supply Management (ISM) reported its non-manufacturing index (NMI) came in at 55.5 in April, which was 0.6 percentage point lower than the March reading of 56.1 percent. The April reading pointed to the weakest expansion in the services sector since July 2017.
Economists forecast the index to increase to 57.0 last month. A reading above 50 signals expansion, while a reading below 50 indicates contraction.
Of the 18 manufacturing industries, 15 reported growth last month, the ISM said.
According to the report, the ISM’s non-manufacturing business activity measure rose to 59.5 percent, 2.1 percentage points higher than the March reading of 57.4 percent. That reflected growth for the 117th consecutive month, at a faster rate in April. Meanwhile, the new orders gauge decreased to 58.1 percent, 0.9 percentage point lower than the reading of 59 percent in March. The employment indicator fell 2.2 percentage points in April to 53.7 percent from the March reading of 55.9 percent. The Prices Index dropped 3 percentage points from the March reading of 58.7 percent to 55.7 percent, indicating that prices increased in April for the 23rd consecutive month.
Commenting on the data, the Chair of the ISM Non-Manufacturing Business Survey Committee, Anthony Nieves, noted, "The past relationship between the NMI and the overall economy indicates that the NMI for April (55.5 percent) corresponds to a 2.4-percent increase in real gross domestic product (GDP) on an annualized basis.”
The latest report by IHS Markit revealed on Friday the seasonally adjusted final IHS Markit U.S. Services Business Activity Index (PMI) stood at 53.0 in April, down from 55.3 in March, but broadly in line with the earlier released “flash” figure of 52.9.
The reading signaled the slowest business activity growth across the U.S. service sector since March 2017.
Economists had forecast the index to stay unrevised at 52.9.
According to the report, output rose at the softest pace since March 2017 as new business growth eased to a two-year low. The rate of job creation also slowed to a two-year low, while business expectations fell to the lowest for almost three years. On the price front, rates of input price and output charge inflation eased to 26- and 18-month lows, respectively.
Anders Svendsen, an analyst at Nordea Markets, says that today’s U.S. Labour Market Report for April supports Fed Chair Powell’s upbeat assessment of the economy from Wednesday’s FOMC meeting.
U.S. stock-index futures rose on Friday, supported by strong employment report for April.
Global Stocks:
Index/commodity | Last | Today's Change, points | Today's Change, % |
Nikkei | - | - | - |
Hang Seng | 30,081.55 | +137.37 | +0.46% |
Shanghai | 3,078.34 | +15.84 | +0.52% |
S&P/ASX | 6,335.80 | -2.60 | -0.04% |
FTSE | 7,412.00 | +60.69 | +0.83% |
CAC | 5,560.36 | +21.50 | +0.39% |
DAX | 12,414.01 | +68.59 | +0.56% |
Crude oil | 61.83 | +0.02 | +0.03% |
Gold | 1,277.70 | +5.70 | +0.45% |
(company / ticker / price / change ($/%) / volume)
3M Co | MMM | 186.47 | 1.72(0.93%) | 5901 |
ALCOA INC. | AA | 26.07 | 0.14(0.54%) | 803 |
ALTRIA GROUP INC. | MO | 53.2 | 0.04(0.08%) | 937 |
Amazon.com Inc., NASDAQ | AMZN | 1,947.50 | 46.68(2.46%) | 234716 |
American Express Co | AXP | 118.1 | 0.85(0.72%) | 3580 |
Apple Inc. | AAPL | 210.6 | 1.45(0.69%) | 221697 |
AT&T Inc | T | 30.7 | 0.08(0.26%) | 24090 |
Boeing Co | BA | 376.51 | 0.71(0.19%) | 5060 |
Caterpillar Inc | CAT | 136 | 0.83(0.61%) | 8036 |
Chevron Corp | CVX | 117.25 | 0.87(0.75%) | 6292 |
Cisco Systems Inc | CSCO | 54.58 | -0.36(-0.66%) | 85211 |
Citigroup Inc., NYSE | C | 70.28 | 0.37(0.53%) | 12734 |
Exxon Mobil Corp | XOM | 77.72 | 0.43(0.56%) | 7677 |
Facebook, Inc. | FB | 194.25 | 1.72(0.89%) | 99383 |
FedEx Corporation, NYSE | FDX | 189.52 | 2.48(1.33%) | 6369 |
Ford Motor Co. | F | 10.37 | 0.03(0.29%) | 84467 |
Freeport-McMoRan Copper & Gold Inc., NYSE | FCX | 11.56 | 0.05(0.43%) | 24001 |
General Electric Co | GE | 10.3 | 0.05(0.49%) | 174447 |
Google Inc. | GOOG | 1,167.50 | 4.89(0.42%) | 8681 |
Hewlett-Packard Co. | HPQ | 20.05 | 0.01(0.05%) | 300 |
Home Depot Inc | HD | 202 | 0.99(0.49%) | 2235 |
Intel Corp | INTC | 50.84 | 0.29(0.57%) | 34840 |
International Business Machines Co... | IBM | 140.26 | 0.67(0.48%) | 261 |
Johnson & Johnson | JNJ | 141.6 | 0.32(0.23%) | 972 |
JPMorgan Chase and Co | JPM | 115.95 | 0.54(0.47%) | 6382 |
McDonald's Corp | MCD | 194.52 | -0.09(-0.05%) | 1384 |
Merck & Co Inc | MRK | 79.86 | 0.34(0.43%) | 1194 |
Microsoft Corp | MSFT | 127.19 | 0.98(0.78%) | 81111 |
Nike | NKE | 85.7 | 0.43(0.50%) | 2398 |
Pfizer Inc | PFE | 40.89 | -0.12(-0.29%) | 3997 |
Procter & Gamble Co | PG | 105.55 | -0.01(-0.01%) | 1612 |
Tesla Motors, Inc., NASDAQ | TSLA | 242.5 | -1.60(-0.66%) | 680715 |
The Coca-Cola Co | KO | 48.51 | 0.12(0.25%) | 3843 |
Twitter, Inc., NYSE | TWTR | 40.2 | 0.25(0.63%) | 84537 |
United Technologies Corp | UTX | 140.14 | 0.34(0.24%) | 451 |
UnitedHealth Group Inc | UNH | 233.84 | 1.39(0.60%) | 632 |
Verizon Communications Inc | VZ | 57.2 | 0.21(0.37%) | 613 |
Visa | V | 162 | 0.88(0.55%) | 9542 |
Wal-Mart Stores Inc | WMT | 101.9 | 0.75(0.74%) | 8135 |
Walt Disney Co | DIS | 134.91 | 0.77(0.57%) | 32345 |
Yandex N.V., NASDAQ | YNDX | 36.98 | 0.48(1.32%) | 17890 |
Wal-Mart (WMT) upgraded to Outperform from Market Perform at Bernstein
The
U.S. Labor Department announced on Friday that nonfarm payrolls increased by
263,000 in April after a downwardly revised 189,000 gain in the prior month
(originally an increase of 196,000). That was the largest increase since
January.
According
to the report, employment rose notably in professional and business services (76,000
jobs), construction (33,000), health care (+27,000), and social assistance (+26,000).
At
the same time, the unemployment rate fell to 3.6 percent in April from 3.8
percent in March. That was the lowest rate since December 1969.
Economists
had forecast 185,000 new jobs and the jobless rate to stay at 3.8 percent.
The
labor force participation rate dropped by 0.2 percentage point to 62.8 percent
in April, while hourly earnings for private-sector workers rose 0.2 percent
m-o-m (6 cents) to $27.77, following a revised 0.2 percent m-o-m gain in March
(originally a 0.1 percent uptick). Economists had forecast a 0.3 percent m-o-m
advance in the average hourly earnings. Over the year, average hourly earnings have
increased by 3.2 percent.
The
average workweek decreased by 0.1 hour to 34.4 hours in April, compared to economists’
forecast of 34.5 hours.
Rabobank's analysts suggest that in the U.S. session, after the Employment Report, attention is to be paid to the ISM non-manufacturing index for April and the speeches of several Fed officials.
Dominick Stephens, a chief economist at Westpac, thinks next week’s OCR decision of the Reserve Bank of New Zealand (RBNZ) is an incredibly close call. He sees a 55% chance of an OCR cut, and a 45% chance of an on hold decision.
Messages from the U.S. side that next week’s talks in Washington with China could be the last round in efforts to end the year-long trade war have been tempered by Beijing’s negotiators, who have suggested the tactic to “generate pressure” should not be taken “seriously”, the South China Morning Post reports.
White House spokeswoman Sarah Sanders said on Thursday that the U.S. President Donald Trump and the Chinese President Xi Jinping will decide after the negotiations between delegates next week whether to meet to finish the trade deal, hinting that this will be the last round of talks before a possible summit between the two leaders.
“Certainly I think that at the end of the day you’re gonna have to see the two leaders sit down and finalise some of the details of any major trade deal like this,” she said.
However, Taoran Notes, a social media account used by Beijing to release trade talk information and to manage domestic expectations, said the hints from the U.S. side that next week’s 11th round of talks is a deadline are merely a trick “to increase tensions and generate pressure on the other side”.
“It’s the same tactic as the US threatening to raise tariffs, it is merely smoke and mirrors to exert extreme pressure [on China],” the post said. “You don’t have to take it seriously.”
It also warned that there is still a possibility that the two sides will end up in “an unhappy departure” if one side wants the other to make compromises and neglects “fairness in negotiation”.
Analysts at TD Securities expect the U.S. nonfarm payrolls to trend modestly lower to 170,000 in April after 196,000-gain in the previous month.
Bert Colijn, a Senior Eurozone Economist at ING, notes that Easter and oil effects have pushed up inflation to 1.7% in April, but don’t get thrown off by this jump in price growth; the trend is still downwards. In May, Easter effects will probably bring core inflation down considerably, he says.
Mikael Olai Milhøj, senior analyst at Danske Bank, points out that the GBP was essentially unchanged on the day after the BoE meeting and they are keeping firm their expectation of range-trading at 0.85-0.87 (roughly +/-1 percent band from the middle).
“The key to moving outside the band is likely (1) getting closer to realising some form of Brexit and/or (2) a significant change to the domestic economy. But both options remain elusive. In case of a resolution of the politics, the core BoE expectation and forecasts remain centred on a soft Brexit with a rebound in inflation and domestic demand. In turn, we think, this should help cap the immediate upside even if politics get resolved, as the central bank would not need to change much. In any case, the BoE would likely wait and see how the economy evolves ex-post a positive Brexit event.”
British Prime Minister Theresa May’s Conservatives and the opposition Labour Party were both punished in a local election by English voters who blame them for the deadlock over Brexit, partial results showed on Friday.
With almost half of English local council vote results declared, the Conservative Party lost 433 councillors and the Labour Party had lost 81 councillors, according to a BBC tally.
The results are another display of how Britain’s 2016 vote to leave the European Union has split the nation beyond traditional party lines, leaving Labour and the Conservatives deeply divided.
The Liberal Democrats won 301 councillors, independent candidates won 215 council seats and Greens, which also backs a second referendum, gained 38, the partial results showed.
According to estimates from Eurostat, in March 2019, compared with February 2019, industrial producer prices fell by 0.1% in the euro area (EA19) and rose by 0.1% in the EU28. In February 2019, prices increased by 0.1% in the euro area and by 0.2% in the EU28. In March 2019, compared with March 2018, industrial producer prices rose by 2.9% in the euro area and by 3.1% in the EU28.
Industrial producer prices in the euro area in March 2019, compared with February 2019, fell by 0.5% for the energy sector, remained stable for non-durable consumer goods, and rose by 0.1% for both capital goods and durable consumer goods and by 0.2% for intermediate goods. Prices in total industry excluding energy remained stable.
In the EU28, industrial producer prices rose by 0.2% for intermediate goods, by 0.1% for capital goods, durable consumer goods and non durable consumer goods, while prices in the energy sector remained stable. Prices in total industry excluding energy rose by 0.2%.
According to a flash estimate from Eurostat, the statistical office of the European Union, euro area annual inflation is expected to be 1.7% in April 2019, up from 1.4% in March. Economists had expected a 1.6% increase
Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in April (5.4%, compared with 5.3% in March), followed by services (1.9%, compared with 1.1% in March), food, alcohol & tobacco (1.5%, compared with 1.8% in March) and non-energy industrial goods (0.2%, compared with 0.1% in March).
According to the report from IHS Markit/CIPS, UK service providers recorded a rise in business activity during April, thereby signalling a return to growth following the marginal decline seen during the previous month. However, the rate of expansion was only slight, and another fall in new work highlighted that subdued underlying demand conditions persisted. Employment numbers were broadly unchanged during the latest survey period, with companies reporting that higher wage costs and weaker sales had led to cautious staff hiring policies.
The seasonally adjusted PMI Business Activity Index posted 50.4 in April, up from March's 32-month low of 48.9. Despite a change of direction for service sector activity, the rate of expansion was much softer than on average in 2018. Survey respondents continued to report that Brexit uncertainty and concerns about the UK economic outlook had encouraged clients to postpone spending decisions.
relief for banks from deposit rate charge would be more than offset by the cost of slower normalisation
improving banking profitability is a challenge for the industry
German growth dip proving to be more persistent than initially thought
0.5 pct growth in Germany this year seems very plausible
Germany likely posted solid Q1 growth but this was helped by one offs, like mild weather
despite solid Q1, there is still no overall improvement in economy
low borrowing costs, rising wages, more supportive fiscal policy suggest that growth wil pick up later this year
Deutsche Bank’s US economists are expecting the US nonfarm payrolls to slow to 160k versus 196k in March, while the consensus is for 190k.
“Our colleagues do note though that their forecast should be enough to keep the unemployment rate at 3.8%, while for earnings they forecast +0.2% mom, a tenth below what the market expects. That should still be enough to see the annual rate nudge up to +3.3% yoy though and just shy of its post-recession high.”
Bank of England Deputy Governor Ben Broadbent said he had not decided whether he would apply to succeed Mark Carney, who is due to step down on Jan. 31 next year.
Broadbent, who has been deputy governor for monetary policy since July 2014, is viewed as a leading contender for the role, though the favourite is generally seen as Financial Conduct Authority chief executive Andrew Bailey.
Broadbent said he was "fully absorbed by and very privileged to have the job I have at the moment".
Pressed on whether he would apply for the governorship before a June 5 deadline set out in the formal job advertisement last month, he said: "I haven't decided yet."
Sales in British shops fell in April, a survey showed, even though warm weather and the Easter holidays should have encouraged shopping.
Accountancy and business advisory firm BDO said its monthly High Street Sales Tracker found sales in UK shops fell 0.4% y/y in April. It was the third monthly decline for in-store sales so far this year.
"Whilst a marginal drop in sales may not on the face of it seem significant, it has to be taken in the context of a low benchmark and, crucially, what should have been perfect shopping conditions last month," said Sophie Michael, BDO's head of retail and wholesale.
"With record warm weather, Easter holidays and more Brits taking staycations, April should have been a bumper month for high street retailers. Instead, these factors couldn't prevent further decline. Real wage growth and low unemployment were not filtering through to spending, with consumer confidence low" she said.
Karen Jones, analyst at Commerzbank, suggests that the EUR/USD pair has held over the 1.1110, the May 2017 low but seems to be losing upside momentum just ahead of the 55 day ma at 1.1274.
“Market may need to consolidate further, intraday Elliott wave counts are contradictory. For now, we are unable to rule out a retest of the 1.1110 support. Be advised that the pattern being traced out is a potential large reversal pattern, we have divergence of the weekly RSI and a 13 count on the weekly chart as well and there is a risk of reversal. Support at 1.1110 is regarded as the break down point to 2018-2019 support line (connects the lows) at 1.1059, the 1.0963 TD support and the 1.0814/78.6% retracement. Initial resistance is the 100 day ma at 1.1329 and the resistance line at 1.1356 ahead of the 200 day ma at 1.1413. Only above the 200 day ma would this imply reversal.”
TD Securities analysts are looking for the US payrolls to trend modestly lower in April to 170k, following the near-200k print posted in the previous month.
“In particular, while we expect a minor rebound in manufacturing jobs following two disappointing payroll prints, this is likely to be more than offset by a deceleration back to trend in job creation in the services sector, following a stronger-than-expected bump in March. That said, the blowout ADP employment report creates upside risks for another stronger-than-expected pace of service sector job creation in April. All in, the household survey should show the unemployment rate ticked down a tenth to 3.7%. Average hourly earnings are expected to rise 0.2% m/m. This pace of wage growth should leave the annual print unchanged at 3.2%. However, if we get a "soft" 0.2% increase, the annual pace in wage growth would slow to 3.1%.”
According to the report from Federal Statistical Office (FSO), the consumer price index (CPI) increased by 0.2% in April 2019 compared with the previous month, reaching 102.4 points (December 2015 = 100). Inflation was 0.7% compared with the same month of the previous year.
The 0.2% increase compared with the previous month can be explained by several factors including rising prices for fuel and for air transport. In contrast, prices for hotel accommodation, glasses and contact lenses decreased.
In April 2019, the Swiss Harmonised Index of Consumer Prices (HICP) stood at 101.85 points (base 2015=100). This corresponds to a rate of change of +0.6% compared with the previous month and of +1.1% compared with the same month the previous year. The HICP is a supplementary indicator for inflation based on a harmonised method across EU member countries. It enables inflation in Switzerland to be compared with that of European countries.
According to analysts at Westpac, downside surprise for Australian inflation has firmed up RBA’s rate cut expectations amongst market participants.
“Two cuts in the cash rate in 2019 has been Westpac’s expectation since February. This view has now become the market consensus, albeit with a difference of opinion still evident on the months the cuts will be delivered. Market pricing currently points to a May cut being a 45% chance after it peaked at roughly two thirds immediately after the disappointing March CPI outcome. 2016’s rate cuts have been used as justification for immediate action in 2019 given both episodes saw inflation well below target. We believe 2019 is different for a number of reasons, including the fact that the RBA carried an explicit easing bias into the 2016 May meeting, which is not the case in 2019.”
According to the report from SECO (State Secretariat for Economic Affairs), swiss consumer sentiment has worsened slightly. The index now comes in only just above average. The labour market has still been assessed positively. However, the likelihood of consumers making major purchases remains low.
In the survey undertaken in April 2019, consumers’ statements were somewhat less optimistic than three months earlier. At -6 points, the consumer sentiment index hardly exceeds its long-term average (-9 points). The index was expected to improve to -3 from -4.
In terms of general economic development, consumers have shown similar levels of optimism to the previous quarter: at -3 points, the relevant sub-index has remained above its long-term average (-9 points). This indicates a continuation of the now only moderate economic growth but not a further worsening of the business cycle development.
The labour market assessments have deteriorated slightly. Mirroring declining unemployment and growing employment, however, the labour market has still been judged positively overall. The sub-index on anticipated unemployment (31 points) has thus stayed well below average. Job security has been estimated as significantly lower than at the start of the year but, over the long term, it has remained above average.
EUR/USD
Resistance levels (open interest**, contracts)
$1.1255 (2770)
$1.1238 (1279)
$1.1217 (221)
Price at time of writing this review: $1.1171
Support levels (open interest**, contracts):
$1.1148 (3244)
$1.1124 (1066)
$1.1099 (2891)
Comments:
- Overall open interest on the CALL options and PUT options with the expiration date May, 3 is 91595 contracts (according to data from May, 2) with the maximum number of contracts with strike price $1,1500 (5753);
GBP/USD
Resistance levels (open interest**, contracts)
$1.3152 (1484)
$1.3106 (1578)
$1.3061 (674)
Price at time of writing this review: $1.3037
Support levels (open interest**, contracts):
$1.2976 (1528)
$1.2948 (1585)
$1.2899 (2101)
Comments:
- Overall open interest on the CALL options with the expiration date May, 3 is 25046 contracts, with the maximum number of contracts with strike price $1,3500 (2424);
- Overall open interest on the PUT options with the expiration date May, 3 is 28244 contracts, with the maximum number of contracts with strike price $1,2850 (2910);
- The ratio of PUT/CALL was 1.13 versus 0.95 from the previous trading day according to data from May, 2
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
Raw materials | Closed | Change, % |
---|---|---|
Brent | 70.15 | -2.47 |
WTI | 61.52 | -3.19 |
Silver | 14.6 | -0.34 |
Gold | 1270.446 | -0.47 |
Palladium | 1353.91 | 0.28 |
Index | Change, points | Closed | Change, % |
---|---|---|---|
Hang Seng | 245.07 | 29944.18 | 0.83 |
KOSPI | 9.16 | 2212.75 | 0.42 |
ASX 200 | -37.5 | 6338.4 | -0.59 |
FTSE 100 | -33.95 | 7351.31 | -0.46 |
DAX | 1.34 | 12345.42 | 0.01 |
Dow Jones | -122.35 | 26307.79 | -0.46 |
S&P 500 | -6.21 | 2917.52 | -0.21 |
NASDAQ Composite | -12.87 | 8036.77 | -0.16 |
Pare | Closed | Change, % |
---|---|---|
AUDUSD | 0.69989 | -0.23 |
EURJPY | 124.594 | -0.15 |
EURUSD | 1.11714 | -0.24 |
GBPJPY | 145.291 | -0.07 |
GBPUSD | 1.30295 | -0.17 |
NZDUSD | 0.66166 | -0.06 |
USDCAD | 1.34706 | 0.26 |
USDCHF | 1.01899 | 0.13 |
USDJPY | 111.501 | 0.09 |
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