Europe
A slowdown in German manufacturing coupled with a spike in German inflation meant a bumpy ride for the euro and European stocks at the start of the week as concerns over Greece’s debt repayment deadlines continued to weigh.
Germany’s manufacturing sector expanded at a slower pace than expected in May according to PMI data, pulling the whole of the Eurozone with it in spite of stronger growth in Italy.
The bounce in crude oil prices helped German inflation pickup to annual growth rate of 0.7%, having been negative as recently as January. Even though the gains are largely oil-related, the sharp rise in inflation will give pause for thought for the Bundesbank, which was deeply opposed to quantitative easing to battle deflation from the offset.
The IMF has taken the heat off Friday’s debt payment due from Greece, having offered the beleaguered country the option of paying all of June’s payments at the end of the month. With Greek Prime Minister Tsipras referring to ‘absurd proposals' from Eurozone officials at the negotiating table, reaching an agreement by the end of June looks optimistic. The Greek press reported an interim agreement could be struck this week.
A slower than expected expansion of UK manufacturing in May dragged on the FTSE 100 which was led lower by resource stocks following tepid manufacturing data from China. Ashtead was topping the index, aided by its US manufacturing exposure after a surprisingly strong resurgence in the sector according to ISM data.
Lloyds (LONDON:LLOY)’s bank shares were up on plans for the sale of government shares to retail investors.
US
M&A amongst US chip-makers helped major averages to early gains on Monday despite a mixed bag of economic data that saw weak inflation and personal spending but a resurgence in manufacturing.
Altera (NASDAQ:ALTR) shares opened higher on confirmation from Intel (NASDAQ:INTC) that it has agreed to acquire the company $54 per share, valuing its rival chip-maker at $16.7bn.
FX
It was a bumpy ride for the US Dollar on Monday with Greece, European and local US data all impacting trading.
In early trade, the dollar was trading higher on relative value as the yen weakened further and Greek worries sent the euro lower. Weaker than expected US inflation and personal spending data coupled with dovish comments from non-voting Fed member Rosengren erased all of the daily gains in the dollar-index but the dollar re-strengthened, making new highs after a leap in manufacturing and construction data in the ISM survey.
The British pound traded heavily after slower than expected manufacturing data in contrast with a jump in the equivalent US data.
The euro dipped on worse than expected German PMI data which dragged the overall Eurozone PMI lower in spite of a recovery in the smaller Spanish and Italian manufacturing economies.
Commodities
Having consolidated for the past three trading sessions above the 50 day moving average, Silver broke higher on Monday to regain $17 per oz. Gold was also trading higher, moving back above the $1200 level that’s been acting as the centre-ground of recent price movement.
Crude oil was relatively flat on Monday following a big move higher on Friday after Baker Hughes data showed another fall in the number of US oil rigs. Oil prices are likely to be fairly subdued leading into Friday’s OPEC meeting conclusion.
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