Allan von Mehren
Danske Bank A/S
Market Movers
A lot of data to chew on today. Euro area kicks off with French and Spanish GDP data for Q4. France is expected to have grown 0.2% q/q, while Spain likely had stronger growth around 0.8% q/q. Later this morning we look for a rise in euro flash CPI to 0.5% y/y from 0.2% y/y and core inflation to move up to 1.1% y/y from 0.9% y/y. M3 and credit data are expected to continue to show solid gains.
In the US focus turns to Q4 GDP which we expect only increased by 0.2% q/q (consensus 0.8% y/y). Some of the weakness, however, reflects another quarter with a negative contribution from inventories. Also, falling oil investments due to the oil price collapse are likely to have weighed on total investments.
The US Employment Cost Index is also worth keeping an eye on as this will give an indication of how tight the US labour market is. Consensus is for an unchanged rate of 0.6% q/q pointing to a moderate rise in wage growth but not yet something to cause concern for the Fed. A bigger worry is the decline in the oil price and global uncertainty as highlighted in the statement this week.
In Scandi we get Swedish household lending, while Norway releases retail sales, credit indicator and unemployment. See Scandi Markets.
Selected Market News
The Bank of Japan joined the easing camp and surprised markets with the introduction of negative interest rates of -0.1% this morning. Governor Haruhiko Kuroda got the move through with a split 5-4 vote. The BoJ also continues its record-high asset purchase programme. The JPY weakened in response and Nikkei is up close to 2%.
BoJ’s move spurred a global risk rally with other Asian markets up as well and US stock futures moving higher. Chinese stocks are up around 3% this morning. The USD/CNY fixing fell slightly again and thus continues the grind lower.
The oil price spiked higher yesterday moving above USD35 per barrel briefly after indications from Russia that it is willing to meet with OPEC next month. The price fell back a bit during the evening but is still above USD34 per barrel. It is uncertain whether such talks are likely but it may be a sign that the pain threshold is being reached as the war of attrition is starting to cause severe stress in some countries.
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