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News : International Last Updated: Feb 1, 2013 - 10:46 AM


Markets: US markets await January payroll data
By Finfacts Team
Feb 1, 2013 - 10:41 AM

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President Barack Obama runs along the Colonnade of the White House with Deputy National Security Advisor Denis McDonough's children, Jan. 25, 2013. The President announced McDonough will become Chief of Staff, replacing Jack Lew, the nominee for Treasury Secretary. McDonough, is an Irish-American and is from a family of 11 children.

UK manufacturing production continued to expand at the start of 2013, following a further increase in new orders and ongoing efforts to clear backlogs of work. The labour market also continued to stabilise following the job losses seen through much of the middle of last year. At 50.8 in January, edging lower from December’s 15-month high of 51.2, the seasonally adjusted Markit/CIPS Purchasing Manager’s Index (PMI) remained above the neutral 50.0 mark for the second month running.

Manufacturing output expanded at the fastest pace  since September 2011. This mainly reflected a  robust increase in consumer goods production, although output also rose at intermediate goods producers. In contrast, investment goods output fell for the eighth time in the past nine months.

Justin Doyle, Investec Bank Ireland, said today:

  • It’s payroll Friday and the market is forecasting a +165k number versus +155k previously. The unemployment rate is expected to remain broadly steady at 7.8% though;
  • Recent months have seen an unusual stability in the payroll numbers, with a relatively narrow range of +130k to +200k recorded over the past six months. Our feeling is that we will see a similar outturn to last month’s +155k, but this being January’s release, benchmark revisions could potentially alter the backrun of data;
  • Since the Fed began to link monetary policy to the labour market performance last December, U.S. Payrolls and the unemployment rate in particular will continue to be of major concern for all asset classes involved.

IFG Trust and Corporate Group, the international division of IFG Group plc has been renamed First Names Group and it provides trust, corporate and fund administration services, with more than 300 employees and offices in the Isle of Man, Jersey, Cyprus, Switzerland, Ireland, UK, the British Virgin Islands and Japan.

Conall Mac Coille, chief economist at Davy, commented:  "Stock indices closed down yesterday (January 31st) – the Euro Stoxx 50 was down 1.1% and the S&P500 0.3%. Investor sentiment remained cautious ahead of today's important US payrolls report.

Today's report could include substantial revisions, giving a very different picture of the US labour market through the past year. At face value, leading indicators paint a buoyant picture for US employment growth in January, but the rise in initial jobless claims back to 368,000 suggests that seasonal factors may have pushed down on exceptionally low claims early in the month."

Robert Eason of Goodbody, commented today: B&Q Ireland placed in examinership; "Yesterday B&Q Ireland Ltd (9 stores with sales of circa €90m) was placed in examinership following insolvency with liabilities of more than €17m to its parent company Kingfisher plc. Under the proposed restructuring at least two stores (Athlone and Waterford) would close. The company believes the remaining seven stores could be viable if rents are substantially cut (current rent of €11.6m is believed to be €5.8m above market levels) and further cost cutting means are implemented. Should no agreement be reached on rents the company notes that a further two stores are in jeopardy.

Last year Grafton completed a similar process which led to the closure of two DIY stores and resulted in annualised rental savings of €4-5m. It is encouraging to see further capacity coming out of the market and it is of note that Grafton has a presence in the towns of the proposed closures. We would not be surprised to see other competitors make similar announcements which should help Grafton's Irish businesses to return to profit growth."

Economic View: Household net wealth grows after four year decline; Dermot O'Leary chief economist of Goodbody comments -- "Irish households have seen an enormous hit to wealth over recent years due to the collapse in housing values. This has resulted in a negative equity position for many households and a resulting desire to pay down debts – the so-called Irish balance sheet recession.

While still a large problem for the Irish economy and financial system, Q3’s quarterly financial accounts gave some indication that the wealth destruction phase is coming to an end. In Q3, household net worth increased by €11bn (2.5%), the first such increase since Q1 2008. This was led by increases in housing (€4.7bn) and financial assets (€4.4bn). The former came as a result of the first increase in house prices since Q4 2007. On the liabilities side of the balance sheet, the long process of deleveraging continued in Q2, with household debt down by a further €1.7bn (0.9%) to €177bn. Since the peak, household debt has now fallen by €27bn (13%), but as a percentage of disposable income, debt stands at a worryingly high level of 204%, down from 218% at the peak in 2008. Our own analysis suggests that debt levels need to fall to below 150% through a combination of debt paydown and income growth. There is still clearly a long way to go to reach this target and will involve a significant proportion of household savings to go towards debt repayment (in Q3, over half of “savings” went towards paying down debt.

Private sector deleveraging is a clear constraint on domestic demand (see our report Stand and Delever for more info). However, if there is a slowing in the pace of this deleveraging, as seems to be happening given the more positive announcement on mortgage lending recently, then this can have a positive impact on domestic demand in any one year. Growing household assets can also help this dynamic."  

US Markets

In New York Thursday, the Dow fell 50 points or 0.36% to 13,861.

The S&P 500 slid 0.26% and the Nasdaq dropped 0.01%.

Bloomberg says the Standard & Poor’s 500 Index returned 5.2% in January in the strongest start to a year since 1997, leading global stocks higher and beating bonds, commodities and currencies.

Asia Markets

The MSCI Asia Pacific Index lost 0.3% Friday, even as 470 shares rose and 431 fell, after gaining for three straight months. The index rose 3% in January.

The Nikkei 225 rose 0.47%; China's Shanghai composite index advanced 1.41%; South Korea's Kospi fell 0.21%; Australia's S&P/ASX 200 gained 0.87%; in Mumbai, the Bombay Stock Exchange's Sensex 30 dipped 0.40%.

Europe Markets

In Europe, the Dow Jones Stoxx Europe 600 is up 0.32% in morning trading Friday.

In Dublin, the ISEQ  is up 0.50%.

Grafton has added 0.65%.

European Benchmarks

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AIB Daily Report

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Currencies

The euro is trading at $1.3667 and at £0.8631.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

Commodities

The Baltic Dry Index, a measure of shipping costs for dry commodities, hit an all-time High of 11,771 on the 21st of May, 2008. From that time it reversed and on the 5th of December, 2008 it hit a low of 663 - - close to a 1986 low.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Thursday this week, the BDI fell 7 points  or 0.91% to 770 - -  the BDI is up 8.73% in 2013.

Crude oil for March 2013 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $97.27 down 22 cents from Thursday's close. In London, Brent for February delivery is trading on the International Commodities Exchange at $115.43. The North Sea benchmark accounts for two-thirds of the global market.

Bloomberg reports that for the first year since the futures were created, Brent crude is poised to overtake West Texas Intermediate (WTI) oil as the world’s most-traded commodity.

Daily trading in Brent jumped 14% to average 567,000 contracts in the year to November 20 compared with all of 2011, while WTI fell 17% to 575,000, according to data from the ICE Futures Europe exchange in London and New York Mercantile Exchange compiled by Bloomberg. The number of Brent futures changing hands has exceeded those for WTI every month from April through October, the longest streak since at least 1995.

Brent, produced in the North Sea, is gaining favour among traders because of its role as the benchmark for energy prices from Saudi Arabia to Russia. Prices have climbed 34% in the past two years, reflecting everything from war in Libya to the embargo on Iran. WTI, the main grade in the US, has risen 9% as the nation, which prohibits crude exports, has struggled to clear a glut at Cushing, Oklahoma, the delivery point for Nymex futures.

Gold spot price

The spot price of an oz of gold is trading in New York at $1665.20, up $1.40 from Thursday's close in New York.

Gold had hit a record high of $1,921.05 a troy ounce on Sept 06, 2011.

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

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