15/07/09

FTSE 100	4237.68, +35.55	Dow	8359.49, +27.81
FTSE 250	7411.09, +132.29	Nasdaq	1799.73, +6.52
FTSE All Share	2166.11, +20.63	S&P 500	905.84, +4.79
Nikkei	9269.25, +7.44	Hang Seng	18220.56, +334.83
Oil (Crude)	$59.52	Gold	$922.80
Base Rate	0.5%	10 Yr Gilt	3.76%
£/$	1.637	Euro/Gbp	0.857

Markets

US stocks rose yesterday as better than expected corporate news outweighed disappointing economic data. Gains were less than may have been expected though as much of the positive news was already accounted for on Monday, such as a jump in profit for Goldman Sachs. Keeping stocks in check was data from the Commerce Department concerning retail sales. The June figure showed a 0.6% increase, which was better than expected, but this was due to rising gasoline prices. The figure excluding auto and gas sales actually showed a fourth consecutive monthly decline. Consumer spending accounts for two-thirds of the country's economic activity and is considered vital if the economy is to bounce back from recession.

The Dow Jones gained 27.81 points to close at 8,359.49 while the S&P 500 added 4.79 points to end at 905.84. The Nasdaq rose 6.52 points to finish at 1,799.73.

Goldman Sachs didn't disappoint investors with its quarterly profits beating expectations. The bank earned $3.44 billion in its second quarter against $2.1 billion the previous year. Having already gained 5% in Monday's session, the financial leader gained just 0.2% yesterday.

Johnson & Johnson went slightly higher after beating second quarter earnings expectations. The Dow component earned $1.15 per share against predictions of $1.11. Shares added 0.9% as a result. CSX also helped lift the market after comments from its chief executive. The railroad company, which reported better than expected results after Monday's close, said they believe the worst of the recession is over. Shares climbed 7%.

US light crude oil for August delivery slipped $0.17 to $59.52 a barrel.

COMEX gold for August delivery edged $0.30 higher to $922.80 an ounce.

Treasury prices fell, raising the yield on the 10 year note to 3.46% from 3.35%.

The Nikkei rose 7.44 points to close at 9,269.25 this morning after the index swung between gains and losses throughout the session. Rising metal prices helped miners higher while on a broader scale, stocks fell after the central bank cut its growth forecast for the nation's economy.

The Hang Seng is currently 334.83 points higher at 18,220.56. Banks lead the index higher after Goldman Sachs reported its second quarter earnings. Bank of Communications rises 2.3% while HSBC gains 1.2%.

The FTSE 100 jumps 34.64 points to 4,272.32 this morning. Commodity producers are stronger after metal prices went higher. Fresnillo adds 4.9%, Xstrata gains 3.3% and Kazakhmys rises 3%. Land Securities is 3.4% higher after KBC upgraded the stock based on price weakness since the start of May and the fact the company has made headway in deleveraging its balance sheet since the rights issue. ICAP is the index's biggest loser, down 1.4% after beginning to trade ex-dividend.

Economics

Unemployment (Jun) 09:30 BST

The balance on employment intentions, according to the BoE’s Agents and the PMI surveys, has increased recently but is still consistent with ongoing job shedding. The rise in claimant count unemployment has been moderating since February. Analysts expect a further 40k rise in the claimant count in June.

UK Average earnings (May) 09:30 BST

Pay growth turned negative early in the year due to a sharp decline in bonuses. It is now back in positive territory but, excluding bonuses, pay growth is trending down. However, this flexibility of the labour market is good news for the economic outlook because if firms can cut pay to reduce costs they are less likely to cut jobs.

US CPI (Jun) 13:30 BST / 08:30 EDT

Analysts expect headline CPI to rise 0.7% in June, with the year-on-year rate falling to -1.5% from -1.3%. The gasoline CPI is set to rise around 17% as prices at the pump rose sharply. Household energy costs could be close to flat after falling for ten straight months, as fuel oil costs have started to rise. The food CPI should continue to fall for a few more months, and analysts look for a 0.2% decline in June. Meanwhile, analysts look for the core CPI to rise 0.13%, close to May’s increase of 0.14%, with the year-on-year rating falling to 1.6% from 1.8%. Rental inflation has been subdued in recent months, and analysts anticipate relatively low tenant rent (+1.5%) and OER (+0.12%) again in June. There continues to be downward pressure in the apparel and recreation categories. On the other hand, there are a few core CPI components that could be boosted by higher energy prices, most notably airline fares and other public transportation.

US Empire manufacturing (Jul) 13:30 BST / 08:30 EDT

The various manufacturing surveys have trending upwards since the beginning of the year, and most recent ISM manufacturing for June rose 2pts up to 44.8. Last month’s Empire index fell 5pts to -9.4, but analysts expect a rebound to -4 for July. Key activity series like new orders and shipments could come in close to the breakeven level of 0, while employment is likely to stay negative but should improve from -22 in June.

US Industrial production (Jun) 14:15 BST / 09:15 EDT

The downward trend in manufacturing hours is now less severe than at the beginning of the year, but the momentum clearly remains negative. Aggregate hours fell for the nineteenth straight month in June, down 1.2%. However, since January, productivity gains have started to offset some of the drop in hours, and declines in manufacturing output have started to slow. June’s ISM production index rose 6.5pts up to 52.5, above breakeven and up from a low point of 26.3 in January. Analysts look for industrial production to fall 0.5% in June, assuming a 0.6% fall in manufacturing and unchanged utilities output. The capacity utilization rate could fall from 68.3% to 67.9%, a new all-time low.

US FOMC minutes (23-24 June meeting) 19:00 BST / 14:00 EDT

The June FOMC statement acknowledged that the pace of economic contraction is slowing, and analysts expect the FOMC to upgrade its Q4 2009 real GDP to a range of -1.5% to -0.5%, versus -2.0% to - 1.3% back in April. Both the headline and core PCE inflation projections for year-end could be increased, given rising energy prices and higher than expected core PCE inflation readings in March and April. Meanwhile, the forecast peak in unemployment will likely be raised again, as analysts look for the FOMC’s year-end projection to be raised to a range of 9.5% to 10.2%, up from 9.2% to 9.6%.

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