Jeremy Cook
World First UK Ltd
Chinese politicians reiterate stimulus goals
US home sales disappoint as rates rise
Japan outlook revised higher
If last night’s weather in the UK was dominated by summer storms then yesterday’s markets were definitive examples of the summer lull. A clear direction was hard to really mark out yesterday and the grind higher by US equities in particular, seems to be running out of steam. The only real reason for gain yesterday were as a result of comments out of China and the predicted poor US housing numbers.
Two Chinese politicians helped Asian equities higher overnight by reiterating the government’s support for the economy. Premier Li Keqiang was said to say to say that the government would not let growth slip below 7% while Vice Premier Zhang Gaoli restated the “country's commitment to take decisive measures to support reasonable infrastructure and social welfare investment to develop the export sector, service industry and small firms.”
Japan has upgraded its economic outlook overnight for the 3rd straight month with chatter around a “self-sustainable” recovery all the more encouraging. News that deflationary pressures are easing is also good news but the path to the BOJ’s 2% target is still a long one.
Yesterday’s US home sales numbers have kept the USD on the back foot. Existing homes sales fell by 1.2% in June, below the 1.5% expansion that the market was looking for. This is the first real study of housing since rates began to rise on chatter around tapering – any further damage to the housing market as a result of rising rates and expectations could slow chatter around tapering.
That being said, according to a new poll 87% of economists now see the Fed slowing asset purchases by the end of the year. Good thing by lucky number is 13% I guess!
Sterling enjoyed a moderately positive day although we have reservations as to ascribing it to the news that the Duchess of Cambridge was in labour! Given news around the housing market here has been positive there is no reason to suggest that today’s mortgage data from the UK should not be GBP positive. Mortgage demand has jumped since the government started its Help-to-Buy scheme.
Have a great day
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Disclaimer: The comments put forward by World First are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as of the date of the briefing and are subject to change without notice. Any rates given are “interbank” ie for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts.
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