Europe
The euro made new twelve year lows versus the US dollar but rebounded from those low levels to make modest gains after slightly better European economic data. The higher euro was a headwind for European equities where export-orientated companies are expected to gain from a lower exchange rate.
French and German CPI came in respectively better than and in line with expectations giving the excuse for the euro to rise off round figures 1.05 to the US dollar and 0.7 to the British pound.
There continues to be no love lost between the top and bottom end of the economic spectrum in Europe surrounding Greece’s debt negotiations. The Head of Bundesbank has said the new Greek parliament has lost the faith of its partners while Greek finance minister Varoufakis likened the ECB’s position on emergency funding measures for his country to asphyxiation.
UK
UK markets were lifted by takeover talks, a shrinking trade balance and strong performance from miners boosted by higher credit growth in China.
New loans rose by 1.02bn yuan in February, less than the rise in January but higher than the 700bn yuan expected. The expansion in loans following accommodative measures from the People’s bank of China lessened worries over China’s slowdown.
The FTSE 100 regained the 6,800 handle in the day’s trading led by AstraZeneca and CRH (LONDON:CRH) with Standard Chartered (LONDON:STAN) and Direct Line insurance tugging at the bottom.
The fourth largest Spanish bank, Banco Sabadell has offered to buy out challenger bank TSB sending shares higher by 25%. Lloyds (LONDON:LLOY) shares have risen as much as 2% on the prospect of being to unload some or all of their TSB holdings faster than previously anticipated.
The UK government still has its stake in Lloyds which it may be able to shift sooner if Lloyds gets an early cash injection from selling its stake in TSB. Recently listed competitor challenger bank Aldermore rose more than 3% on heightened prospect of M&A within the banking sector.
Morrisons shares were mixed on a rather dismal annual performance that picked up in the fourth quarter. The supermarket made an annual loss of £792m and like-for-like sales fell 5.9% on rising competition from discounters Aldi and Lidl.
Shares of online fashion retailer Asos (LONDON:ASOS) flew off the shelves gaining 25% after the company posted strong quarterly sales growth boosted by a 30% increase in the UK
US
US markets continued to be led by fears over the next move from the Fed in next week’s meeting and the corresponding movements in the US dollar. On Thursday disappointing retail sales dampened the prospect of hawkish Fed and helped drive a pullback in the US dollar and a bounce in equities.
US retail sales fell -0.6% when a rise of 0.3% expected marking the third consecutive monthly fall.
Retail sales excluding auto sales weren’t much better falling -0.1% in the month when a rise of +0.5% was expected.
The US consumer is still not reacting to the lower oil prices by increasing consumption in a sign that low wages due to the lower standard of jobs created and the record numbers of long term unemployed are hampering the economy's recovery.
Weekly jobless claims dropped back to 289K when 305K was expected.
Major tech names including Apple (NASDAQ:AAPL), Facebook Inc (NASDAQ:FB), Twitter Inc (NYSE:TWTR), Amazon.com Inc (NASDAQ:AMZN) and Yahoo! Inc (NASDAQ:YHOO) were all making gains in the region of 1%.
FX
The US dollar suffered a broad sell-off today as the euro bounced off 1.05, European inflation data modestly improved and US retail sales data disappointed.
EUR/USD dropped to 1.05, the lowest in fourteen years before recovering the 1.06 handle while EUR/GBP fell towards 0.7 then rebounded back above 0.71.
GBP/USD continued its weakness despite improving UK trade data eyeing up a close below 1.49.
Commodities
Gold and silver were relatively listless with a few quiet days trading likely leading into the next meeting of the Federal Reserve.
Brent and WTI prices diverged with US crude oil losing ground while international prices moved slightly higher. Tomorrow’s US rig count is becoming increasingly useless information because even though more rigs are coming off line, the remaining rigs are upping production resulting in growing stockpiles.
Copper prices recovered again on the news of credit expansion in China and talk of further potential easing from the central bank.
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