Nikkei 98.24 -0.02 0.00 Morning Report Shanghai 5789 7 ...

[Pages:3]Morning Report

Wednesday, 14 June 2017

Equities (close & % change)

Sydney Futures Exchange (close & change)

Interest rates (close & change)

S&P/ASX 200

5772.8

-1.7%

Last

Overnight Chg Australia

Dow Jones

21328.5

0.4% 10 yr bond

97.58

0.00

10 year bond

2.40

0.00

Nikkei

19898.8

0.0% 3 yr bond

98.24

-0.02

3 year bond

1.70

0.00

Hang Seng

25852.1

0.6% 3 mth bill rate

98.28

-0.01

90 day BBSW

1.72

-0.01

Shanghai

3302.9

0.4% SPI 200

5789

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United States

DAX

12765.0

0.6% FX Last 24 hrs

Open

High

Low

Current 10 year bond

2.21

0.00

FTSE100

7500.4

-0.2% TWI

64.3

-

-

64.5 2 year bond

1.36

0.01

ComDmaotadaitsieast 8(c:0lo0saem&. Cchhaanngegefr)om previous tArUadDi/nUgSdDay (excluding0th.7e5S4F0E whic0h.i7s5t6he5 chan0ge.7d5u2r4ing the0n.7ig5h3t 6sessi3on-m).oSnotuhrcTeB:iRlleuters, B0lo.9o8mberg. 0.00

CRB InTdhexursday17,52.85 May-0.1201A7UD/JPY

Gold

1266.6

0.7 AUD/GBP

82.87

83.24

82.86

82.95 Other (10 year yields)

0.5952 0.5978 0.5907 0.5909 Germany

0.27

0.02

Copper

5690.0

-58.3 AUD/NZD

1.0475 1.0483 1.0430 1.0443 Japan

0.06

0.01

Oil (WTI)

46.5

0.4 AUD/EUR

0.6730 0.6756 0.6713 0.6723 UK

1.03

0.07

Data as at 8:00am. Change from previous trading day (excluding the SFE which is the change during the night session). Source: Reuters, Bloomberg.

Global Sentiment: Financial markets await the Federal Reserve's FOMC meeting tonight, where it is widely expected to raise interest rates. We will get the decision early tomorrow morning (4am AEST). Investors will be looking for any details on the Fed's plans for shrinking its balance sheet at Fed Chair Yellen's press conference, following the decision.

Share Markets: The US stockmarket had a strong session, with both the Dow and the S&P 500 hitting record closing highs. The Dow rose 0.4%, the S&P 500 lifted 0.5% and the Nasdaq gained 0.7% for the session.

Interest Rates: US government bond yields finished the session little changed ahead of the Fed meeting. The yield on the 10-year government bond was unchanged at 2.21%. The yield on the 2-year government bond lifted from 1.35% to 1.36%.

In the UK, government bond yields rose following the release of stronger UK inflation data. The yield on the 10-year government bond increased from 0.97% yesterday morning to 1.03%.

Foreign Exchange: The US dollar index (weighted against a basket of currencies) fell in yesterday's session ahead of the Fed's meeting. The strongest performer was Sterling, which gained ground overnight following the release of higher than expected UK inflation data. The Yen lost ground against the US dollar.

The Australian dollar fell against both the US dollar and Sterling yesterday. AUD/USD is currently trading around 0.7536.

Commodities: The oil price rose by US$0.40 to US$46.50 per barrel ahead of the American Petroleum Institute reporting increased stockpiling. Investors await figures tonight from the official Energy Information Administration for confirmation.

Australia: Business conditions and confidence weakened both weakened in May. Conditions fell from a revised reading of 13 in April to 12 in May. Confidence dropped from 13 to 7. Nonetheless, both readings remain above their long-run averages and point to a healthy level of activity. Additionally, capacity utilisation rose to its highest since mid2008, providing positive prospects for employment and business spending.

Europe: The German ZEW expectations survey was weaker than expected, falling to 18.6 in June. This was below the May reading of 20.6 and defied consensus expectations for a further increase.

The Euro zone ZEW expectations survey lifted to 37.7 in June, from 35.1 in May.

United Kingdom: CPI rose by 0.3% in May, topping consensus expectations for a 0.2% increase. For the year to May, CPI rose by 2.9%, up from 2.7% in the year to April. It was the fastest pace of inflation since June 2013, reflecting, in part, the impact of

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the lower currency. Core consumer prices lifted 2.6% in the year to May. This was up from 2.4% in the year to April.

Producer output prices rose by 0.1 % in May. For the year to May, the pace of PPI was unchanged from April, at an increase of 3.6%.

United States: The NFIB small business optimism index held at 104.5 in May, unchanged from the April reading. The detail in the survey pointed to an improvement in the labour market component of the survey, including an increase in wages as businesses tried to attract workers.

Producer prices were unchanged in May, meeting consensus expectations, after rising by 0.5% in April. The flat result reflected a fall in gasoline prices, while services prices increased. For the year to May, producer prices rose by 2.4%. Core producer prices (excluding food and energy) rose 0.3% in May, which was higher than consensus expectations. For the year to May, core producer prices lifted by 2.1%.

Morning Report

Today's key data and events

AU WBC-MI Consumer Confidence Jun prev 98.0 (10:30am) CH Retail Sales May y/y exp 10.7% prev 10.7% (12pm) CH Industrial Production May y/y exp 6.4% prev 6.5% (12pm) CH Fixed Asset Investment May YTD y/y exp 8.8% prev 8.9% (12pm) JN Industrial Production Apr final prev 4.0% (2:30pm) EZ Ger. CPI (EU Measure) May final exp 1.5% prev 1.4% (4pm) UK Jobless Claims Change May prev 19.4k (6:30pm) ILO Unemployment Rate Apr Q prev 4.6% (6:30pm) EZ Industrial Prod'n Apr exp 0.5% prev -0.1% (7pm) US CPI May y/y exp 2.0% prev 2.2% (10:30pm) US Retail Sales May exp 0.0% prev 0.4% (10:30pm) FOMC Rate Decision exp 1.00-1.25% prev 0.75-1.00% (4am)

Times are AEST. All data forecasts are m/m or q/q and seasonally adjusted unless otherwise specified. Forecasts for Australian data are house forecasts and for other countries are consensus forecasts.

Jo Horton, Senior Economist Ph: (02) 8253 6696

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Morning Report

Contact Listing

Chief Economist

Besa Deda dedab@.au (02) 8254 3251

Senior Economist

Josephine Horton hortonj@.au (02) 8253 6696

Senior Economist

Janu Chan chanj@.au (02) 8253 0898

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