Danske Research Team
Danske Bank A/S
Market movers today
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US durable goods orders will include the core capital goods orders, which is a good proxy for corporate investments. Core orders have moved higher since the middle of last year. The past months have shown somewhat slower momentum. The numbers today wi ll show whether this was just a small pause or whether the loss of momentum is real. We expect investment growth to be robust this year based on st rong earnings growth from the beginning of the year and improved sent iment among companies.
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The US is due to release revised figures for Q1 GDP as well as for May consumer confidence from the University of Michigan. We do not expect any big revisions to these numbers.
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The G7 Summit in Italy will be held on Friday and Saturday. It will be the first summit for US President Donald Trump, Brit ish Prime Minster Theresa May, French President Emmanuel Macron and Italian Prime Minister Paolo Gent iloni. The summit will among other things focus on the global economy and foreign policy. Issues such as protect ionism, North Korea, the fight on terror and climate change are likely to be on the agenda.
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In Norway, the important Q2 oil investment survey is due out (please see Scandi sect ion for more details).
Selected market news
This morning, emerging Asian currencies and stocks are t rading on caut ious note following the Moody’s downgrade of China’s credit rat ing, which hurt t he out look for t he region’s t radedependent economies. Moody’s cut China’s rat ing t o A1 from Aa3, cit ing a worsening out look for t he nat ion’s financial st rength. We have in recent months pointed to the increasing st ress symptoms in the Chinese financial markets and an imminent slowdown in the economy as the Chinese authorit ies seek to rein in the debt problems in the economy.
Yesterday, the Trump administ rat ion released its long-awaited budget for the fiscal year 2018 and t he administ rat ion’s priorit ies for the next 10 years. The Trump administ ration expects to eliminate the government deficit by 2027 due to a combinat ion of higher GDP growth (3% per year) and large welfare spending cuts. The budget does not contain significant new details on tax reforms than the already known overall principles. We think it is going to be very difficult for the Trump administ rat ion to get the budget through the US Congress given the divisions in the Republican party and more generally we maintain our longheld view that Trumponomics will come later and be smaller than pledged. See Research US: Trum p’s budget seem s dead on arrival in Congress –do not expect too much of Trumponomics, 24 May 2017.
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