Chinese PMI flat
The Chinese PMI remained at the level from March in April, that is 51,8 pts. – in line with expectations and signaling a moderate expansion of the Chinese economy. Unsurprisingly, the data didn’t have an impact on the market. When it comes to China, CPI is what matters most at the moment as inflation will have the largest impact on monetary moves.
Weaker data from US
The US Q1 flash GDP disappointed, even though the consensus was already low – at 2% annualized. The data came out at +1,8%A on negative contributions from a real estate market, public sector (the largest negative contribution since 1983! And a hint why US markets and the Congress are afraid of a speedier fiscal consolidation) and imports (possibly on pricier oil). However, more stable components like personal consumption or investments in equipment and software were solid at +1,9% and +0,8% respectively. Thus there is still a decent chance for the GDP to bounce back above 3% in the second quarter.
Weekly initial claims actually provided a more serious reason to worry, climbing to 429k from 404k, way above the market consensus of 392k. A holiday week might be to blame, yet the number is above 400k for the 3rd straight week just as it seemed at the beginning of April that we might be below 400k threshold for good.
Data are dollar and equities negative but investors will like to see some confirmations and the next week offers an opportunity with ISMs and the payrolls report in the calendar.
Equities down on Microsoft
After four days of advances, equities suffered somewhat in the US late trading yesterday and today at the European opening and the Microsoft might be to blame. The company announced disappointing results. For the first time in two decades, the net profit (5,23 bln USD) was lower than at Apple (5,99) as a surging demand for Apple products limited a demand for laptops and consequently for Microsoft’s operating system. Revenues in the Windows division fell 4,4% to 4,45 bln USD, below a consensus of 4,6 bln USD.
Events to watch – Inflation in the zone, US data and Bernanke
The list of macroeconomic releases is quite long today, even though there are no real market movers included. In Europe investors will be awaiting a flash HICP for the zone for April (5.00 ET, 11.00 CET, consensus 2,7%) and there will be also a Swiss economic barometer KOF (5.30 ET, 11.30 CET, consensus 2,2 pts.).
In the US there are reports on US incomes and spending for March (8.30 ET, 14.30 CET, consensus +0,4% for both), on the activity in the central region measured by the Chicago PMI (9.45 ET, 15.45 CET, consensus 68,5 pts.) and on consumer sentiment measured by the UM index (final reading, 9.55 ET, 15.55 CET, consensus 69,8 pts.). Bernanke’s speech (0.30 PM ET, 18.30 CET) is unusually irrelevant as it doesn’t address the current monetary policy issues and is just two days past a key conference.
Chevron and Caterpillar will release quarterly results before the first bell.
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Przemysław Kwiecień PhD, Chief Economist |
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