Sunday, 31 July 2016

{LONGTERMINVESTORS} Fwd: Morning Market Starter - August 1, 2016


---------- Forwarded message ----------
From: <research@icicibank.com>
Date: Mon, Aug 1, 2016 at 11:16 AM
Subject: Morning Market Starter - August 1, 2016
To: stockdesai@gmail.com






Key developments:


  • European Banking Authority (EBA) published its 2016 EU banking sector stress test results indicating overall resilience of the banking sector. Italian Bank Monte Paschi fared the worst among all EU banks on the back of its NPA build-up.

Central Bank watch:


  • New York Fed President William Dudley commented that it would be "premature" to rule out a rate hike this year, adding that US is very close to its inflation and employment objectives, though slow global growth is dampening the pace of recovery.

o Dallas Fed President Robert Kaplan said that he is still "hopeful" for a sturdy US growth rate. He also added that Federal Reserve's policy stance is not as accommodative as it may appear.

o San Francisco Fed President John Williams remarked that strong data prints warrant the case for two interest rate hikes this year, though Q2 2016 GDP print came in slightly lower than expected partly due to inventory swings.


  • Bank of Japan (BoJ) Governor Haruhiko Kuroda commented post policy that Japan's economy is likely to expand moderately as a trend, and that the Government's economic package is appropriate in helping achieve BOJ's inflation target. He also added that he still sees room for further accommodation by the Central Bank.


Chart : US GDP (ann.) for Q2 2016 (advance print) came in steeply below forecasts, at 1.2% QoQ vs. the expected 2.5% QoQ



Global market developments:


  • Macroeconomic data:

o US:Advance estimate for Q2 2016 GDP reading (ann.) came in steeply below forecasts, at 1.2% QoQ vs. the previous (revised) print of 0.8% QoQ. Chicago purchasing manager's index in July was lower at 55.8 (prior print: 56.8).  On the other hand, University of Michigan sentiment index came in higher at 90.0 (prior print: 89.5).

o EZ: Headline inflation in July edged higher to 0.2% YoY vs. 0.1% YoY previously. Meanwhile, Q2 2016 GDP reading (advance estimate) showed a decline, coming in at 0.3% QoQ as against 0.6% QoQ earlier.

o CN: Manufacturing PMI in July slipped into the contractionary zone (below 50 levels), to 49.9 (prior print: 50.0). However, Caixin manufacturing PMI rose to the expansionary zone in July (final print) to 50.6 from 48.6 earlier.


  • US markets ended mixed on Friday. While lower than expected Q2 2016 GDP data prints weighed on the indices, upbeat earning results from major technology companies capped the downside. Dow Jones closed 0.1% lower while S&P was 0.2% higher.

  • Asian equities are trading largely in the green. Slight gains in crude prices and some downward correction in Japanese Yen are aiding the indices this morning. However, downbeat manufacturing PMI from China are weighing on Chinese shares. Nikkei (0.2%) and Hang Seng (1.3%), Kospi (0.7%) and Australia's ASX (0.8%) are trading up. Meanwhile, Shanghai Composite (-1.0%) is posting losses.

  • US Treasuries are trading slightly lower with the 10Y benchmark yield currently at 1.47% vs. the prior close of 1.45%. However, overnight, yields declined sharply by over ~8 bps, retracing thereafter.


Global market snapshot






Domestic market developments:


  • India's Apr-Jun fiscal gap currently stands at 61.1% of FY2017 budgeted aim vs. 51.6% in the corresponding period last fiscal.

  • Indian Oil Corp Ltd on Sunday cut prices of petrol by INR 1.42/litre and diesel by INR 2.01/litre.



Regards,
ICICI Bank

Contact:

Sonal Surana
(+91-22) 2653-1414 (extn: 7243)
sonal.surana@icicibank.com

Radhika Wadhwa
(+91-22) 2653-1414 (extn: 7206)
radhika.wadhwa@icicibank.com

​ 



--
CA. Rajesh Desai

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