In local markets yesterday, there was little in the way of economic data releases although the fallout from the budget continues as opposition governments vow to block reforms citing a “budget built on lies” however the budget projections have had minimal impact on the markets thus far.
Across US markets yesterday it was another positive day with PPI, CPI, Philly Fed Manufacturing numbers and Unemployment claims all outperforming expectations. PPI figures, released overnight on Wednesday showed that prices have increased by 0.6% against an anticipated 0.2%. CPI data showed growth at 0.3% which is the biggest gain since June 2013 and unemployment claims fell to the lowest level since May 2007. The Philly Fed continued its recent run of form posting the third consecutive outperform with a 15.4 reading against the anticipated 13.9.
In Europe, data continues to disappoint with CPI numbers as expected but well short of the ECB target inflation of 1% Italian GDP actually showed a contraction of 0.1% against an expected gain of 0.2% although Germany outperformed slightly with 0.8% gain against a 0.7% expectation. The continued sluggish growth in the region coupled with ongoing tensions in the Ukraine has given rise to speculation of potential interest rate cuts by the ECB to negative territory or a possible QE program as adopted by the US and UK. The announcement of their next move is expected on 5th June.
Elsewhere tensions continue to rise between Russia and the Ukraine with the Ukraine pushing on with operations to remove separatists from eastern borders. If Russia was to disrupt elections in the Ukraine, the US and other allied forces would impose further sanctions on Russia, already suffering from slower growth as a result of current sanctions.
No local data today but the Chinese Foreign Direct Investment number out at lunchtime might spark some much needed movement. The number, which represents the total investment capital made by foreign enterprises, economic organizations and individuals, above the previous read of 5.5% could see a boost for the Aussie in afternoon trading.