Market Report: 24 April 2017
Apart from the political highlights last week, the surprising UK election call that led to the FTSE 100’s seven week low and the French presidential election, traders also paid attention to several economic releases worldwide.
World’s second biggest economy, China, expanded steadily in Q1 which contributed to a GDP growth of 6.9% year-over-year. Industrial production increased by 7.6% compared to March last year, higher than the market consensus. Strong manufacturing and output in utilities were the driving force behind that figure. Retail sales also rose higher than expected. The actual result of 10.9% year-on-year increase is well above the analysts’ forecast of 9.7%, boosted significantly by strong car sales data.
US Industrial Production increased 0.5% in March, which is slightly higher than the forecast and mainly driven by high utility output as a result of unusual weather conditions. The latest EU inflation figures, released by Eurostat on Wednesday, went in line with the economists’ estimates. EU Consumer Price Index rose 0.8% in March and 1.5% on annual basis.
Manufacturing in the Eurozone was robust in April and went up to 56.8, showing the largest increase in new orders since March 2011. In the UK, Retail Sales dropped much sharper than expected, even after the positive revision in February. Overall sales decreased down to -1.8% in March. This trend is in line with the reports that retail companies announced recently. The year-on-year also dropped drastically, from 3.7% down to 1.7%.
As this week will be limited in terms of economic announcements, investors will focus primarily on GDP data releases. On Thursday, the European Commission will release its latest update on the economic sentiment in the EU and the Eurozone. Analysts expect that confidence dropped slightly in April down to 107.5 from 107.9 in April.
On Friday, the Q1 UK GDP numbers will be launched. Economists expect a slowdown in economic growth and set a consensus of 0.5%. The year-over-year estimate is 2.2%. Higher EU inflation figures for April are also expected. The year-on-year market consensus is set at 1.8%, while in March it was 1.5%. In the US, preliminary figures for Q1 GDP will be released. Analysts expect quarter-over-quarter growth of 1.7% and 2.1% increase compared to Q1 2016.
Author: Helal Miah, Investment Research Analyst