Press review - page 14
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Wall St. climbs on Bernanke, S&P 500 passes record :
(Reuters) - Stocks jumped on Thursday, with the S&P 500 index climbing above its all-time closing high, after Federal Reserve Chairman Ben Bernanke reasserted that monetary policy will remain accommodative for some time.
More than 80 percent of shares on the New York Stock Exchange were higher on Thursday and all 10 S&P 500 industry sectors advanced, led by gains in materials and technology shares.
Bernanke sparked a rally in equity futures Wednesday night after he said the U.S. unemployment rate of 7.6 percent overstated the health of the job market. "A highly accommodative policy is needed for the foreseeable future," he said.
"Rather than being hawkish, Bernanke is saying the right thing that the market wants to hear," said Yu-Dee Chang, chief trader of ACE Investments in McLean, Virginia.
We are having the following news event at 12:30 GMT (or 14:30 MQ metatrader 5 time):
2013-07-12 12:30 GMT | [USD - PPI core]
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US Producer Price Index – Current & Historical Data :
Previous Reading: 0.5% (MoM), 1.7% (YoY)
Analysts Expect: 0.5% (MoM), 2.1% (YoY)
Release Date & Time: Friday, July 12, 12:30 GMT (Released monthly, about 15 days after the reporting month ends.)
Source of Report: Bureau of Labor Statistics, U.S. Department of Labor
Release URL
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Upcoming Release Commentary:
U.S. producer price index gained 0.5 percent in May after falling 0.7 percent in the prior month. The core rate, which excludes volatile items like food and energy, increased 0.1 percent, to record the seventh straight monthly gain. Food prices rebounded from the 0.8 percent decline in April, gaining 0.6 percent. Energy prices climbed 1.3 percent, following a drop of 2.5 percent. Gasoline prices rose 1.5 percent after dipping 6.0 percent in April.
For June, analysts expect a 0.5 percent increase in the top line producer price index, while core PPI should report a modest 0.1 percent increase. Gasoline and food prices likely witnessed a small gain last month. Inflationary pressures remain muted, and the moderate domestic demand makes it extremely difficult for producers to pass on the increased costs to consumers.
U.S. Producer Price Index vs. Core Producer Price Index:
How it impacts the U.S. Dollar:
Since Producer Price Index measures prices at the producer level before they are passed on to the consumers, it is an early indicator of inflation. A rising PPI signals an increase in inflationary pressures, which could force the Federal Reserve to raise interest rates. Similarly, a declining PPI is indicative of falling prices, and may suggest an economic slowdown, which could compel the Fed to slash rates. Since interest rates are the primary factor in currency valuation, a high PPI reading is generally seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish) for the currency. Due to sharp volatility in food and energy prices, which constitute nearly one-quarter of the PPI, analysts and economists prefer monitoring the PPI excluding food and energy, also called the “core” PPI, to get a better picture of the prevailing trend.
Understanding Producer Price Index:
Producer Price Index is a family of indexes that measure the change in the price of finished goods and services sold by producers. The headline figure is expressed as the percentage change in producer price from the prior period. The Producer Price Index comes in three variants:
The Producer Price Index is considered a major precursor of both consumer price inflation and profits, and is very useful for analyzing potential sales and earnings trends.
By Marc Jones
LONDON | Fri Jul 12, 2013 3:43am EDT
(Reuters) - European shares squeezed out small early gains on Friday and the dollar steadied, as this week's soothing talk of careful support from the world's major central banks left world stocks heading for their best week in almost eight months.
Sentiment in Europe was underpinned by Wall Street closing at record highs on Thursday.
The broad FTSEurofirst 300 index .FTEU3 opened up 0.2 as it eyed a fifth day of gains, while a steady end in Asia left MSCI's world stock index .MIWO00000PUS, which tracks markets in 45 countries, on track for its best week since November.
This week's rally in financial markets has spread across stocks and bonds to oil and metals and been driven by hints from the U.S. Federal Reserve that it may not be as eager to phase out its support as markets had started to believe.
"Markets have been reassured by the mention (by the Fed) of financial conditions and the weakness of inflation," Guy Foster, head of portfolio strategy at Brewin Dolphin, said.
"There remains little reason for the Fed to tighten policy although given their comments to date we assume a modest reduction in purchases in September," he added.
Currency markets were steadier following a breathtaking selloff in the dollar on Thursday as investors cut bullish positions on the reassessment of the Fed's view.
The dollar index .DXY, which tracks the greenback's performance against a basket of major currencies, edged off 2-1/2 week lows, having slumped more than 2 percent. That was the steepest fall in four years, normally seen only during financial crises.
After an early dip, the euro had set up camp at $1.3065 having jumped as far as $1.3208 on Thursday to be well off this week's trough of $1.2755.
Gold eased after four days of gains but was on track for its biggest weekly gain in nearly two years as easing concerns about an early end to U.S. monetary stimulus boosted bullion's appeal as a hedge against inflation again.
Copper was on course for its best week in two months as it dipped back below $7,000 a ton, while Brent oil was steady at $108 a barrel having hit a three-month high on Thursday
2013-07-12 12:30 GMT | [USD - PPI core]
past data is 0.5% (monthly data)
forecast data is 0.5% (monthly)
actual data is 0.8% (mom) according to latest press release
if actual > forecast = good for currency (for USD in our case)
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U.S. Producer Prices Rise More Than Expected In June :
With energy prices showing a substantial increase, the Labor Department released a report on Friday showing that U.S. producer prices rose by more than expected in the month of June.
The Labor Department said its producer price index rose by 0.8 percent in June following a 0.5 percent increase in May. Economists had been expecting the price growth to match the increase seen in the previous month.
Excluding food and energy prices, core producer prices edged up by 0.2 percent in June after inching up by 0.1 percent in May. The increase in core prices matched economist estimates.
Don't Be Afraid To Buy Into Strength :
In life, “when” matters.
If your coworkers see you out drinking at 8 p.m., they will consider you a fun loving guy who enjoys himself after work. However, should your coworkers see you out drinking at 8 a.m., they will consider you an alcoholic who probably won’t be their coworker too much longer.
To illustrate further, if you take a plate of warm cookies to a new neighbors house at 3 p.m., you will be considered hospitable and kind. If you take a plate of warm cookies to a new neighbors house at 3 a.m., you will be considered creepy, weird and possibly get shot depending on your geographical location.
Yes, “when” does indeed matter in life.
In the markets, however, the issue of “when” is much less relevant. This is contrary to the popular wisdom that insists on timing being such an important facet of the investor experience. Obsessing over “when” for investors is one of the biggest stumbling blocks to profits. It creates trepidation, doubt and anxiety that would not come into the equation if the issue of “when” was left in the realm of life and out of the realm of finance.
Dollar gains after selloff; stocks nearly flat :
(Reuters) - The dollar bounced back from a steep selloff on Friday while world stock indexes were nearly flat as investors' focus shifted to mixed U.S. corporate earnings.
Gold dipped as the dollar rebounded and investors booked profits after four days of gains, but was on track for its biggest weekly advance in nearly two years.
Stocks, bond prices and commodities have rallied this week while the dollar tumbled on hints from Federal Reserve Chairman Ben Bernanke that the U.S. central bank was unlikely to phase out its stimulative bond buying before the unemployment rate improved further.
U.S. stocks were little changed, a day after the Dow and S&P 500 hit all-time closing highs. However, the S&P 500 was on track to end the week up 2.5 percent, its best weekly performance since January.
...
GOLD EASES, OIL CLIMBS
Commodity markets have also enjoyed a strong run this week as talk of continued central bank support has bolstered hopes of a pickup in global growth.
Spot gold was trading down 0.4 percent at $1,279.80 on ounce, having cut some losses. Bullion was on course for its biggest weekly gain in nearly two years on easing fears of an early end to Fed stimulus.
Brent oil extended gains and was at session highs in afternoon trading. Brent was last up 97 cents at $108.70 while U.S. crude oil was up 76 cents at $105.67 a barrel.
Gold fell as a stronger dollar curbed demand for an alternative investment, narrowing the biggest weekly gain since October 2011 after Federal Reserve Chairman Ben S. Bernanke called for maintaining stimulus.
Bullion jumped 5.5 percent in the previous four days, the best run since March. On July 10, Bernanke said that the U.S. needs “highly accommodative monetary policy for the foreseeable future.” The Bloomberg Dollar Index, which tracks the greenback against 10 major trading partners, rose as much as 0.6 percent. Gold slumped 23 percent last quarter.
“The dollar is pushing gold down,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “The overall trend remains weak.”
Gold futures for August delivery slipped 0.2 percent to settle at $1,277.60 an ounce at 1:43 p.m. on the Comex in New York. It reached $1,297.20 yesterday, the highest since June 24, and advanced 5.4 percent this week.
Gold has tumbled 24 percent this year, wiping $60.4 billion from the value of gold exchange-traded product holdings, after some investors lost faith in the metal as a store of value and amid speculation that the Federal Reserve will end its stimulus program.
Silver futures for September delivery fell 0.8 percent to $19.792 an ounce in New York, cutting the weekly gain to 5.6 percent, still the most since November. It’s the worst performer in the Standard & Poor’s GSCI Spot Index of 24 commodities this year.
On the New York Mercantile Exchange, platinum futures for October delivery slipped less than 0.1 percent to $1,406.90 an ounce. Palladium futures for September delivery gained 0.7 percent to $722.90 an ounce.
Weekly outlook: July 15 - 19 :
The dollar was higher against the other major currencies on Friday, recovering from a sell-off earlier in the week after comments by Federal Reserve Chairman Ben Bernanke saw traders reassess expectations on the timing of a possible reduction to the bank’s easing program.
The euro was lower against the dollar, with EUR/USD sliding 0.21% to settle at 1.3068, trimming the week’s gains to 1.62%.
The euro came under pressure after ratings agency Fitch downgraded France from its triple-A rating on Friday, citing growing government debt levels and the weak outlook for economic growth.
The dollar was also higher against the pound and the yen, with GBP/USD down 0.51% to 1.5107 at the close and USD/JPY climbing 0.28% to 99.25. The pound ended the week 1.16% higher, while the yen was up 1.68% for the week.
The dollar fell sharply on Wednesday after Bernanke said the Fed will continue to maintain accommodative monetary policy for the foreseeable future, citing low levels of inflation and the high unemployment rate.
Bernanke said the bank will not raise interest rates until the U.S. unemployment rate hits 6.5%.
The comments came after the minutes of the central bank’s June policy meeting showed that Fed policymakers remain divided over when to begin tapering its USD85 billion-a-month asset purchase program.
Around half of Fed policymakers believe the bank should start to scale back bond purchases by the end of the year, while many others believe the labor market still remains too weak.
Data on Friday showed that U.S. consumer sentiment ticked lower in July, with the University of Michigan’s consumer sentiment index slipping to 83.9 from 84.1 in June, compared to expectations for a reading of 85.0.
Elsewhere, the Australian dollar fell to three-year lows against the greenback on Friday amid concerns over a slowdown in growth in China.
AUD/USD hit session lows of 0.8999, the lowest since September 2010, before settling at 0.9050, down 1.52% for the day and ending the week 0.77% lower.
In the week ahead, investors will be looking ahead to U.S. data on retail sales, consumer inflation and housing sector activity. Monday’s data on Chinese economic growth will be closely watched and a monetary policy decision by the Bank of Canada on Wednesday will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, July 15
Markets in Japan are to remain closed for a national holiday.
Australia is to publish government data on new vehicle sales, a leading indicator of consumer confidence.
China is to release official data on second quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health. Beijing is also to produce data on industrial production and fixed asset investment.
Switzerland is to publish government data on producer price inflation.
Later Monday, the U.S. is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.S. is also to publish the Empire state manufacturing index and a report on business inventories.
Tuesday, July 16
New Zealand is to release official data on consumer price inflation, which accounts for the majority of overall inflation.
The Reserve Bank of Australia is to release the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
The U.K. is to release official data on consumer price inflation, as well as reports on producer price inflation and retail price inflation.
The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health, as well as data on economic sentiment in the wider euro zone.
The euro zone is to release official data on consumer price inflation.
Canada is to publish official data on manufacturing sales, a leading economic indicator.
The U.S. is to release official data on consumer price inflation, industrial production and the capacity utilization rate.
Wednesday, July 17
The Bank of Japan is to release the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
The U.K. is to release official data on the change in the number of people unemployed and the unemployment rate, as well as data on average earnings.
The ZEW Institute is to publish a report on economic expectations in Switzerland, a leading indicator of economic health.
The BoC is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The bank is to hold a press conference after the rate announcement.
Canada is to release government data on foreign securities purchases.
The U.S. is to release official data on building permits, a leading indicator of future construction sector activity, as well as data on housing starts. The Federal Reserve is to release its Beige book.
Thursday, July 18
Australia is to publish an index of leading economic indicators and a private sector report on business confidence.
The U.K. is to publish government data on retail sales.
In the euro zone, Spain and France are to hold auctions of 10-year government bonds.
Canada is to produce official data on wholesale sales, a leading indicator of consumer spending.
The U.S. is to release the weekly government report on initial jobless claims and the Philly Fed manufacturing index.
Friday, July 19
In the euro zone, Germany is to release official data on producer price inflation.
The U.K. is to release government data on public sector net borrowing.
Canada is to round up the week with official data on consumer price inflation.
2013-07-15 02:00 GMT | [CNY - Gross Domestic Product (GDP)]
If actual > forecast = good for currency
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China GDP Up 7.5% On Year In Q2 :
China's gross domestic product expanded 7.5 percent on year in the second quarter of 2013, the government said on Monday - matching forecasts and slowing from 7.7 in the previous quarter.
On a quarterly basis, GDP added 1.7 percent - missing expectations for 1.8 percent but up from 1.6 percent in Q1.
Also, industrial production was up 8.9 percent on year in June, shy of forecasts for 9.1 percent and down from 9.2 percent in May.
Retail sales jumped an annual 13.3 percent, beating expectations for a 12.9 percent increase - which would have been unchanged from the previous month.
Fixed-asset investment for the period of January to June was up 20.3 percent on year versus expectations for 20.2 percent and down from 20.4 percent in the month prior.
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Aussie dollar edges up after China GDP meets expectations :
The Australian dollar clawed higher on Monday after China's second-quarter economic growth matched market expectations, easing worries that the world's second-largest economy could be slowing faster than expected.
The Aussie dollar touched an intraday high of $0.9110 after the release of China's second quarter gross domestic product (GDP) data, and last stood at $0.9097, up 0.5 percent from late U.S. trade on Friday.
"The Australian dollar rose since there had been fears that the number might come in lower. But at the same time, the data wasn't spectacularly good either," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation (SMBC) in Singapore.
China's annual economic growth slowed to 7.5 percent in the second quarter of 2013 from 7.7 percent - the second straight quarter of slower growth, official data showed on Monday.
Other Chinese economic indicators released along with the GDP were mixed, with retail sales exceeding expectations but industrial output and fixed-asset investment coming in below market forecasts.