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May 29, 2018

Orbex, Market Preview: 3 important Economic Events that affected Market Trends last week

Learn from the past market movement. Here are the main Economic data & news that affected the market last week!

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This article is originally referred from Orbex Market Preview.

The euro currency was seen declining over yet another week.

The sentiment soured after concerns of the newly formed Italian government which is backed by anti-EU parties.

Elsewhere, the FOMC released its meeting minutes which showed that officials could wait for inflation to overshoot the 2% target.

New Zealand Retail sales slows in Q1 2018

The quarterly retail sales report from New Zealand showed that retail sales on a seasonally adjusted basis grew at the slowest pace in five years.

Official data released by Statistics New Zealand last week showed that the quarterly retail sales rose at a pace of just 0.1% in the first three months of the year.

This was well below the estimates of a 1.0% increase that was forecast.

New Zealand Retail sales (Q1 2018): 3% (Source: Tradingeconomics)

On a volume basis, the quarterly retail sales rose at an annual pace of 3.0% which marked a strong slowdown compared to the 5.4% increase and was the weakest pace of increase since the third quarter of 2012.

The weaker pace of sales reflected that first quarter GDP is likely to be weighed down as well signalling a slowdown in the New Zealand’s economy.

Motor vehicle sales also declined by 1.1% on the quarter.

The data comes amid the slowdown in the New Zealand housing market as well as a net decline in the immigration.

The data comes following the new government that has been in place which inherited a strong economy which was growing at a pace of 3% on an annualizd basis, touching down to 2.9% by end of 2017.

An analyst with Westpac, Satish Ranchhod said:

“We expect that household spending growth will remain modest over the coming year as the housing market cools in response to government policy changes,”

commenting on the retail sales report.

UK’s inflation rate falls to a 13-month low

Consumer prices in the United Kingdom fell to a 13-month low in April on an annualized basis casting further doubts about the timing from the Bank of England for the next rate hike.

The UK’s consumer prices or CPI rose 2.4% on a year over year basis in April, data from the UK’s Office for national statistics showed last week.

This was below forecasts of a 2.5% increase.

The decline in the headline CPI came on weaker air fares and the timing of the Easter holiday which push overall inflation closer to the BoE’s 2% inflation target rate.

The decline in the headline CPI was the lowest since March 2017 when the inflation rate measured was at 2.3%.

On a monthly basis, consumer prices increased 0.4% but this slightly below the 0.5% estimates that was forecast.

Core inflation rate which strips the volatile food and energy prices were seen slowing to 2.1% on an annualized basis in April.

This was slower than the previous month’s core inflation rate at 2.3%.

There were some increase in fuel prices over the year but this managed to offset the drag from cheaper air fares.

Based on the inflation data, economists quickly pushed back their forecasts for an August rate hike.

The Bank of England was initially slated to hike rates in May. But weak inflation data pushed the timing of this rate hike to August which is now questionable.

Eurozone flash PMI’s rises at the slowest pace in 18 months

Flash PMI’s released by IHS Markit for the Eurozone for the month of May showed that the Eurozone’s economic growth was further slowing.

This comes amid the first quarter GDP data which showed that the Eurozone economy increased at a pace of 0.4% on a quarterly basis.

The data from showed that the Eurozone composite output index fell to an 18-month low to 54.1 in the month of May.

This was a weak reading as the composite index was registered at 55.1 in April. Economists forecast that the composite output index would remain unchanged at 55.1.

The manufacturing PMI fell to an 18-month low at 55.5 in May compared to 56.2 in April. Services PMI for the Eurozone fell to a 16-month low at 53.9.

Despite the weak patch of data, economists maintain that the numbers were consistent with the 0.4% quarterly pace of growth that the Eurozone registered in the first quarter.

Chris Williamson, the chief economist for IHS Markit said that

“In the previous months, various factors such as extreme weather, strikes, illness and the timing of Easter dampened growth, while May saw reports of business being adversely affected by an unusually high number of public holidays.”.

Original Source: Orbex Market Preview

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