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Danske Bank A/S
Market Movers
The main event for financial markets today will be Federal Reserve chair Janet Yellen’s appearance before the Financial Services Committee to deliver the semiannual report on monetary policy. Although the all important US jobs report Friday supported the notion that the US labour market continues to show progress, the recent significant tightening of global financial conditions and deterioration in other US key figures mean that Yellen, in our view, will aim not to strike a too hawkish tone on monetary policy.
In the UK, industrial and manufacturing production figures are due for publication. In the calculations of the first estimate of GDP growth for Q4 (which was 0.5% q/q), the Office for National Statistics assumed that industrial production declined 0.2% m/m, manufacturing production was flat.
In Scandi markets, focus will be on new CPI figures in Denmark and Norway.
Selected Market News
US NFIB small business optimism declined to 93.9 in January from 95.2 in December. Although it remains at a fairly high level, it has been trending down over the past year. In particular, small businesses have become much more worried about the outlook for the next six months. Although this is not one of the most important US key figures, it is another sign that the recovery in the US economy might have lost steam. Consequently, sentiment in financial markets remained weak yesterday, as investors took a cautious stance ahead of Yellen’s speech on monetary policy today. Stock prices and commodity prices declined yesterday and the trend has continued overnight with the Japanese Nikkei index falling 4%.
The International Energy Agency (IEA) has just published the February version of the Oil Market Report. Among the few revisions to the outlook for supply and demand there were downward revisions to US and Chinese oil demand in Q4 15. Demand in both economies was revised down by 0.1mb/d. Hence, for China, the drop in oil demand in Q4 15 turned out to be larger than previously thought. On the outlook for the oil market, IEA is, among other things, concerned about the impact on oil demand from the risk of lower global economic growth and the strong dollar. The US Energy Information Administration revised lower its forecast for US crude production in 2016. It now forecasts US crude production to fall to 8.7mb/d this year and to 8.5mb/d next year from 9.4mb/d in 2015.
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