Daily Company News from ForexMart

[luisforexmart]

UK Economy Faces Fastest Inflation Growth in 4 Years
British people could possibly face a period of living squeeze as the UK consumer prices are now recording its fastest growth ever within a 4-year period, in addition to the onslaught of the upcoming general elections as well as the Brexit negotiations. UK’s per annum inflation rate rose by 2.7% last month as compared to 2.3% last March, which is the fastest rate of inflation for the country since 2013. UK inflation rates started increasing immediately after the Brexit referendum, wherein the sterling pound exhibited a depreciation immediately after the referendum. This recent surge in UK inflation rates mirrors an international trend of sudden inflation growth after a long period of muted price action prompted several central banks to resort to more radical stimulus policies.

[luisforexmart]

U.S. Business Activity had a Slight Recovery, according to Markit
Two surveys conducted by American businesses this month and showed that the US economy continued to have a steady growth, despite the fact that manufacturers who served plenty of blue-collar jobs had constrained for the past months.
According to the readings of IHS Markit, the manufacturing PMI dropped to 52.5 in May versus the previous 52.8 which marked an eight-month low.
The manufacturers witnessed an increase that started in the latter part of 2016 and resumed earlier this year prior the recent ease up. While companies tend to slow down their production later on, in order to fend off too much inventory buildups.
Any reading that exceeds 50 and above would indicate that many executives are optimistic enough that business setting will improve.
Markit also mentioned that the services index of the United States climb higher reaching its 4-month high at 54, compared with the former 53.1.
The service sector of the economy takes up four out five workers in the US over different fields like banking, medical care, real estate, retail, and travel.
Apart from the slide of the manufacturing industry, the economy of U.S. shows a momentum recovery during the Q2 in spite of its lack of success in 2017.
Moreover, the MarketWatch polled some economists to project the growth in the state, saying that it will surge up gaining 3% in the spring versus the 0.7% in the Q1 while there other predictions that it will expand to 4%.

[luisforexmart]

Trump Proposed 45 Percent Cut in Mexico Aid from U.S. Spending
On Tuesday, the U.S. spending reserved for foreign aid for Mexico and Central America are to be reduced as proposed by the President Donald Trump. The budget was proposed to trim as much as $3.6 trillion government spending in the following ten years for 2018 budget proposal.Although, this may not get a legislative approval as to how it is currently with other departments cuts especially in the State department.
Mexican aid worth $87.66 million will be lessened over 45 percent from the 2016 expenditure when Trump's proposal is approved. The budget cut will be transferred to the Mexican military including counterterrorism funds and other government programs. One of the officials commented that these deals are focused on bolstering border security and fight against corruption that may have hindered transnational criminal organizations. There will be a meeting to discuss the employment and security concerns in Central America in June.

[luisforexmart]

FOMC Minutes Signal Interest Rate Hike Next Month

Fed officials are now more than ready to raise its short-term interest rates after stating in their meeting last month that increasing its rates are now “more than appropriate”. The central bank also moved to begin cutting back on its Treasury and mortgage securities holdings, which is currently worth $4.5 trillion. The Fed also stated in its minutes that they will be allowing an accumulation of these said securities in the long run without having to reinvest its proceeds to other assets. The Fed’s next policy meeting is scheduled this coming June 13-14 and will be immediately followed by a press conference from Fed Chair Janet Yellen.

[luisforexmart]

China’s Debt-rating Downgraded by Moody’s to A1 from Aa3
The credit rating of China was downgraded by Moody’s Investors Service on Wednesday, the previous Aa3 (Double A-3) were down to A1 which means that the Chinese economy is going to grind lower for the next years as the country showed slow growth and its debt continuously increase. The downgrade is done due to the financial pressure that the government faces after years of credit-driven stimulus.
Craig Erlam, a Senior Market Analyst of Oanda, said in an interview, “Because talk of Chinese debt and concerns about the size of Chinese debt has been going on for the last few years. They seem to be very reliant on these high levels of growth, which has been slowing.” He further added that the credit downgrade does not surprise him at all.
The second largest economy in the world gained 6.7 percent last year and 6.9 in 2015, this pace is the slowest based on the records since 1990 by which Erlam believes that the following years appears to be challenging.
The bond credit rating company has expectations that the direct debt burden of China’s government will climb higher reaching 40 percent of 2018’s Gross Domestic Product which is close to the 45 percent as the decade ends. However, it remains lower to the 60 percent for the European Union.
The Finance Ministry of the republic claims that the downgrade is based on an improper approach that overestimated the risks on the increasing debt.

[luisforexmart]

NZ’s Budget Surplus Apportioned to Infrastructures
New Zealand anticipates exceeding the budget excess prediction for 2017. The former projected amount to NZ$473 million surpluses in December and significantly increased to NZ$1.62 billion for the first six months. These figures are crucial yet the government has cope with the cost of a huge new capital investment that the authorities consigned to.
These higher-than-expected results were supported by potent corporate levies and pending rehabilitation following the November earthquake. The government targets to trim the net credit budget up to 10 to 15 percent the forecasted 23.2 percent for the first half of the year.
The country also intends to invest the excess money in infrastructure to further enhance the progressing economy according to the Finance Minister Steven Joyce. The budget amounts to NZ$11 billion allocated for infrastructures including road, train railways, prison and housing in the succeeding four years. Part of this allocation as much as NZ$6.5 billion aims to raise family incomes through modification of tax threshold and grants from the government.

[luisforexmart]

EU in Need of Additional ECB Stimulus, Says Draghi
ECB President Mario Draghi stressed in a statement made last Monday that the eurozone is still in need of more monetary stimulus from the central bank in spite of the region’s apparent economic recovery. Draghi warned that the underlying inflation in the EU economy minus highly volatile food and energy prices are still too insignificant for the ECB to make any actual adjustments with regards to its current monetary policy. The central bank is currently facing mounting pressure from several EU politicians as they call for the ECB to instigate a full-on policy reversal as the European Union enters a new era of increased inflation rates and a recovering economic status.

[luisforexmart]

Germany Negotiate Wages Increased by 2.8 Percent
The negotiated wages in Germany climbed by 2.8 percent in the first quarter which has significantly improved than the previous year according to the data released on Tuesday. These wages comprise of basic pay, one transaction settlement, yearly bonuses and back remuneration from salary deals. An estimated 17 million workers in Germany from companies who transact every one to two years.
In comparison, the present 2.8 percent growth from January to March is more than the long-term average of 2.5 percent than the last quarter of 2016. It also ascended at a faster rate than the 2.5 percent for the past five years indicating a rise in wage growth from a 2.2 percent elevation in the fourth quarter last year. It exceeded that increase in consumer costs augmenting by 1.9 percent in the same period implying that households have more disposable income amid a rising inflation.

[luisforexmart]

Asian Markets Weakened as it Traded Sideways
The stock markets of Asia were unsteady on Tuesday since investors hovered in the sideline prior the publication of the raft of economic statistics scheduled this week. While, the Taipei market coupled with Shanghai, Hong Kong are not in operation due to a holiday.
Moreover, the Nikkei 225 of Tokyo declined by 0.5 percent to 19,576.19, seeing the Kospi of South Korea to plunged to 0.6 percent to 2,338.21, S&P/ASX 200 of Australia lower down by 0.1 percent to 5,701.60. Likewise, Singaporean market had a dip along with the Philippines and New Zealand but the Indonesian benchmark surge.
Jingyi Pan, a market strategist at IG based in Singapore, said that the Asian house market is projected to maintain its thin volumes which start in the countries of China, Hong Kong, and Taiwan which are all closed in consideration of the market holiday.
The data were to be issued this week would likely offer some hints for the investors about the current state of the international economy. Investors anticipate for the consumer confidence index along with the eurozone business data later this day.
On the energy sector, the benchmark for US crude dropped 4 cents up to $49.76 a barrel in electronic trading on the New York Mercantile Exchange. The contract had increased by 90 cents up until $49.80 per barrel yesterday. The Brent crude further decreased by 20 cents till $52.44/barrel in London.

[luisforexmart]

May Appoints Political Opponent as Junior Minister
UK Prime Minister Theresa May has recently appointed a leading anti-EU Tory campaigner as a junior Brexit minister following unrest within the PM’s team of officials assigned to work on the Brexit negotiations a mere week before the actual start of the said negotiations. The newly-appointed official was identified as Steve Baker, who used to be UK’s chairman of Conservatives. Baker has also led a group of Tory lawmakers which aims to hold the UK government against a complete separation from the European Union.

[luisforexmart]

Credit Losses Bound to Get Higher in the Industry
Credit card losses will most likely increase in volume in the United States and all over the industry especially to JPMorgan Chase & Co. as mentioned by Gordon Smith, the head of the bank’s consumer businesses during the conference held on Tuesday.
U.S. banks are being objective in their policy decision on whether to tighten credit policies and it is not far that most lenders within the financial sector are inclined to impose a stricter credit card lending standards instead of attenuating it.
JPMorgan earnings are seen to have increased in sales volume but declining credit trend that is still similar to other lending institutions. It is forecasted as shown in the Fitch ratings report that this will persist in the next few quarters because of the rising trend in loan growth pushed by lower credit rates. However, Smith said that there is no need to get distressed over this matter as this is already expected after some time of low loss rates in the past and is now approaching the end of the cycle.

[luisforexmart]

Germany’s Economic Confidence Declined Unexpectedly
Financiers from Germany shows confidence towards the recovery of the Euro region, however, the UK economy is not lucky enough to gain a stronger stance. Since the economic condition of the Great Britain fell off this year, along with its prospects, based on the data from the ZEW think tank, as the European economic research institute conducted a poll for almost 200 investors.
The margin came higher for the UK compared with other economies mentioned in the survey, because German capitalists are disappointed with the latest economic status. It appeared that more than 63 percent of the respondents predicted that the situation will get even worse during the second half of 2017 which is the highest ratio versus other nations involved in the poll.
According to headline ZEQ indicator, the projections for the German economy had declined comparatively reaching 18.6. While the presumptions for the euro zone was raise to 37.7 versus other confidence indices like PMI and Ifo. The reading of the ZEW headline was keep restrained below the average level which started in 1991.

[luisforexmart]

Fed Implements Rate Hike, Maintains Outlook for Next Hike
The US Federal Reserve has pushed through with its planned interest rate hike for this month while outlining its plans to continue with stricter monetary policies in spite of the country’s weak inflation rates. FOMC officials approved the central bank’s third rate hike within a six-month period and hinted at possibly another rate hike just before the end of 2017. Fed Chair Janet Yellen stated in a press conference following the announcement that the bank’s plans of unwinding its policies might be implemented sooner than later, especially if the country’s economic status meets the expectations of the Fed. Moreover, the central bank is also looking into a three-quarter point rate increase for 2018 just like its previous projection last March.

[luisforexmart]

NZ Below Expectation Economic Growth
The New Zealand economy climbed by 0.5 percent in the first quarter of the year but still lower than market expectations as the construction sector weakened. The forecast figure of the central bank is 0.9 percent while the analysts predicted it to attain 0.7 percent, which obviously fell short from both predictions.

Despite positive growth for the milk production and a moderate growth of GDP, these were out shadowed by weak data from the construction sector and the mixed results from the service sector. The construction data declined by 2.1 percent for Q1 that negated the 4.3 percent augmentation in agriculture particularly the milk production.

An economic analyst described this phenomenon to be transient and the economy will advance at estimated of 3.0 to 3.5 percent this year. Also, other sectors are performing well but there is no need for the Reserve Bank of New Zealand (RBNZ) to adjust its cash rate from a record low of 1.75 percent.

[luisforexmart]

Job Creation in Australia Reached 42,000, Unemployment Rate Slowdown by 5.5% in May
Australia created additional jobs with a total of 42,000 which exceeded the expectations of 10,000 as indicated in the roughly calculated poll led by Reuters, disclosed by the Australian Bureau of Statistics on Thursday. However, the number of unemployed for this month accounts to 5.5 percent which came in lesser than predicted 5.7 percent.
The Aussie dollar further gained strength after releasing the current employment data of the Australian economy at exactly 9:30 HK/SIN while the exchange rate against its American counterpart is greater by 0.5 percent.
The employment figures appeared to be volatile but the rate in the past few months showed some development within the labor sector, said by Steven Milch, the chief economist of Suncorp. Mr. Milch also mentioned that the number remained stable for the third consecutive month and much stronger than their anticipated figures.
In case that the trend will continue, it will also increase the wages which could reinforce the reflection of the RBA towards the economy as a “half empty glass”. This shows that the Reserve Bank of Australia is not probable to revise its policy anytime.
The central bank announced that earlier this June the labour market indicators will remain mixed, keeping its benchmark cash rate on hold at a record low of 1.5 percent. The financial institution also noted that the slackening of real income will curtail the growth in household spending.