BOJ Holds From Further Stimulus, US Equities Lower As GDP Slows, ASX SPI200 Futures Down 8 Points

US equity markets and the US Dollar closed lower on Thursday, dragged down by less than expected GDP in the first quarter of 0.5% vs 0.7% expected. Elsewhere initial jobless claims came in slightly lower than forecast with a reading of 257,000 vs 260,000. The S&P500 was down 0.92% as was the Nasdaq100 (-1.19%) and the Down Jones Industrial Average (-1.17%). Japanese equities were also lower following the decision from the Bank of Japan to leave its key easing tools unchanged – 80 trillion yen target for expanding monetary base, -0.1% deposit rate as well as a program buying risky assets such as ETFs. The market had clearly factored in further easing from the BOJ, as evident on knee jerk reaction on the Nikkei 225 & USDJPY shown on the two charts below. The Nikkei 225 index closed down -3.16% and the Yen appreciated against the US Dollar by 2.49%.

European equities were mixed with the DAX30 (+0.21%), CAC40 (-0.04%), FTSE100 (+0.04%), Euro Stoxx 50 (-0.16%) as German CPI figures showed deflation over the past month as expected (-0.2% vs 0.8% prior) while year on year we are also seeing a slowdown with a reading of 0.1% vs 0.3% prior despite the record monetary stimulus measure from the European Central Bank. This low reading will central give some further scope for Mario Draghi to look to add further stimulus from the ECB, potentially as early as the June 2nd meeting.

Commodity prices moved higher on Thursday thanks to a weaker US Dollar, Iron Ore (+2.96%), Natural Gas (+4.16%), Copper (+0.36%), Brent Crude (+1.82%), WTI Crude (+1.54%) while precious metals Spot Gold & Spot Silver were also higher +1.64% & 1.83% respectively.

Looking to the local market, the ASX200 closed +0.73% higher on Thursday at 5,225. Meanwhile ASX SPI200 futures are down 8 points in overnight trading suggesting a weaker open this morning.

Data Releases:

·         German Retail Sales (YoY Mar) 4:00pm

·         Euro-Zone Unemployment (Mar) 7:00pm

·         Euro-Zone CPI (YoY Apr) 7:00pm

·         Euro-Zone GDP (YoY & QoQ Q1) 7:00pm

·         Canadian GDP (MoM & YoY Feb) 10:30pm

·         University of Michigan Consumer Confidence Survey (Apr) 12:00am



Source: Rivkin, Bloomberg, Updata

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This article was written by James Woods - Global Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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