Market movers today
In the US, the FOMC minutes from the February meeting are due out. The statement did not contain much interesting news but the minutes may enlighten us on the different stances within the FOMC. We do not expect much news from the minutes either as the Fed is waiting for more news on Trumponomics. In addition, Fed Governor Jerome Powell (voter, neutral) is due to speak tonight on the economic outlook and monetary policy.
German Ifo expectations fell from 105.5 in December to 103.2 in January and we expect it to decrease further in February to 102.5. Despite the high level in the survey in Q4 16, pointing towards very strong German GDP growth, actual economic activity was ‘just’ 0.4% q/q in the first release. Overall, optimism about growth prospects for the start of 2017 could be on the decline.
In the UK, the second estimate for GDP growth in Q4 is due out, which is somewhat interesting, as the expenditure components such as private consumption and investments in Q4 are included for the first time in this release. While growth continued at the same pace in H2 16 after the EU vote, we think GDP growth will slow down eventually this year.
In Scandinavia, Norwegian LFS-unemployment data for December (November-January) will be published this morning, while the Swedish Debt Office will release its updated borrowing forecast. For more info see ‘Scandi Markets’ on page 2.
Selected market news
US equity markets closed at a new record high last night as US investors returned to the market after Monday’s holiday. In Asia, risk appetite appears more moderate this morning with mixed trading in the regional equity indices.
The oil price moved higher yesterday and the price on Brent crude topped the USD57/bbl level for the first since the beginning of the month. Constructive risk sentiment during the European session and bullish comments from OPEC Secretary General Mohammad Barkindo contributed to the move higher. The higher oil price was a supporting factor the currencies of oil producing countries like the rouble and the Norwegian krone and EUR/NOK broke below the important technical level of 8.83-8.84 from the beginning of February, which may open up for further downside.
In the UK, lawmakers in the House of Lords agreed without a vote last night, after two days debate, to let the government’s Brexit move on to the ‘committee stage’ starting on 27 February. Here, lawmakers will consider amendments and we are likely to see attempts to rewrite the bill. The government does not have a majority in the Upper House and could potentially lose votes on amendments. If wording in the bill is changed by the Upper House, it will be sent back to the Lower House (House of Commons) for another debate and voting.
Data for Chinese property prices, released overnight, showed that house prices increased in January in the fewest cities in a year. New home prices, excluding government-subsidised housing, gained last month in 45 of the 70 cities tracked by the National Bureau of Statistics. Moreover, in the cities where house prices still go up, it seems that price inflation is moderating, indicating that recent tightening measures have worked to dampen house price inflation.
