United Kingdom Trade Gap Narrows

By Xinyang December 9, 2016


News Event

From Trading Economics: The trade deficit in the United Kingdom narrowed by £3.8 billion to £2.0 billion in September 2016 from an upwardly revised £5.8 billion in the previous month. It was the smallest trade gap since May this year, as exports increased by 4.6 percent, boosted by a 8.7 percent rise in the export of goods, while imports declined by 3.6 percent. Between the 3 months to July 2016 and the 3 months to October 2016, the total trade deficit for goods and services widened by £4.7 billion to £13.2 billion. Balance of Trade in the United Kingdom averaged -1458.51 GBP Million from 1955 until 2016, reaching an all time high of 2946 GBP Million in March of 1981 and a record low of -6058 GBP Million in November of 2013.

Market Opening Wrap

In Asian Equity Markets stocks edged down on Friday but were on track for weekly gains, while the euro became more settled after the volatility seen in the wake of the European Central Bank's decision to trim the size of its asset purchase program while also extending it for longer than many analysts had expected. MSCI's broadest index of Asia-Pacific stocks outside Japan fell 0.3 percent, and was poised for a weekly gain of 1.9 percent. The benchmark Nikkei gained 1.2 percent to 18,996.37, the highest closing level since December 2015. The broader Topix gained 0.8 percent to 1,525.36 and the JPX-Nikkei Index 400 advanced 0.8 percent to 13,655.69. The Shanghai Composite rose 0.4 percent and the Hang Seng Index fell 0.48 percent.

In Currency Markets the dollar rose broadly on Friday as U.S. bond yields rose, while the euro sank after the European Central Bank's decision to extend its debt-buying program even as it cut the size of its purchases disappointed currency bulls. The greenback was up 0.4 percent at 114.430 yen, coming within the reach of a 10-month high of 114.830 set last week. The euro lost 0.2 percent to $1.05920, after falling 1.3 percent overnight, the biggest intraday loss since late June. The Australian dollar fell 0.1 percent to $0.7452 against a broadly higher dollar. The New Zealand dollar was steady at $0.7173. The dollar index gained 0.1 percent to 101.230 following an overnight rise of nearly 1 percent. It was on track to gain 0.3 percent this week.

In Commodities Markets  oil prices extended gains on Friday on optimism that non-OPEC producers would agree to cut output following a cartel agreement to limit production, but the upside was limited amid uncertainty over the size of the production curbs. London Brent crude for February delivery was up 17 cents at $54.06 a barrel, after settling up 1.7 percent on Thursday. NYMEX crude for January delivery was up 33 cents at $51.17 a barrel. Both contracts are set for a weekly decline of around 1 percent. Spot gold was down 0.3 percent at $1,167.38 an ounce and was set for a weekly decline of about 0.8 percent, pressured by the stronger U.S. dollar and expectations that the Fed will raise interest rates next week.

In US Equity Markets  stock indexes climbed again on Thursday and set fresh record highs as a month-long rally following the presidential election of Donald Trump rolled on. The Dow Jones industrial average rose 0.33 percent, to 19,614.81, the S&P 500 gained 0.22 percent, to 2,246.19 and the Nasdaq Composite added 0.44 percent, to 5,417.36. Financials led the way again on Thursday, rising 0.9 percent. Industrials fell back 0.5 percent, weighed down by defense stocks. Lululemon rose  15 percent after the yoga and leisure apparel retailer reported a better-than-expected quarterly profit. Express Scripts shares tumbled 6.7 percent after short-seller Citron Research called the pharmacy benefit manager the "real culprit" in drug price gouging.

In Bond Markets the benchmark Japanese government bond yield hit a 10-month high on Friday as the super long maturities fell following the previous day's 30-year debt auction. The 30-year JGB yield rose 5.5 basis points to 0.705 percent , its highest since mid-March. The 10-year benchmark JGB yield was up 1 basis point at 0.050 percent after hitting 0.055 percent, its highest since February. Japan's finance ministry had sold 800 billion yen ($7.00 billion) of 30-year JGBs on Thursday.

Source: Institute of Trading and Portfolio Management
By Xinyang December 9, 2016

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