June PMIs are released in Norway and Sweden

Market movers today

While ISM manufacturing has recovered a lot from the winter lows, we believe it can improve a bit further in the short term before moderating in Q3. Hence, we expect ISM manufacturing to improve to 55.7 in June from 55.4 in May.
We expect the first estimates for the manufacturing PMIs in Spain and Italy to have moved broadly sideways in June. The unemployment rate is expected to have stayed unchanged in both Germany and the euro area in June and May respectively.
In the UK there could be some focus on the release of minutes from the Financial Policy Committee (FPC) on 17 June when some moderate tightening of conditions for mortgage loans was announced to cool the housing market. However, the macroprudential tightening measures announced were less than expected and it will be interesting to see to the degree of consensus on the FPC. UK manufacturing PMI for June is due for release today.
The conflict between Ukraine and Russia may stir up the market as Ukraine’s president has ended cease-fire with rebels in east Ukraine.
June PMIs are released in Norway and Sweden.

Selected market news

Chinese NBS manufacturing PMI rose to 51.0 in June from 50.8 much as expected. The index is now firmly above 50, which indicates that the Chinese economy is expanding. This supports our view that the economy has now moved to a phase of moderate recovery and we expect growth to pick up in the second half of the year.

The Japanese stock market got a healthy boost overnight from the positive reading out of China and the Tankan business survey showed that both large manufacturers and nonmanufacturers are now more optimistic about the future.

Ukraine’s President Poroshenko has ended a cease-fire with separatists in east Ukraine and has declared he is ready to regain control over the region. The conflict is thus far from over and could have market-moving impact. Pressure on the Russian market could mount and the European natural gas market may also be at risk.

A bearish report from the US Department of Agriculture yesterday triggered a large selloff in the grains market. The prices of corn, soybean and wheat all showed declines in the range of 3-5% as US stocks remain plentiful and are bound to increase further on the back of expected large harvests.

Yesterday the EU approved a BGN3.3bn state aid package for Bulgarian banks after a bank run targeted First Investment Bank AD on Friday. Concerns over the bank’s liquidity position, following the decision to put Corporate Commercial Bank AD under administration, triggered the bank run.

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