Here’s today’s ‘Just A Minute’ bringing you a 60 second summary of what’s happening in the financial markets:
Main Trading Event Of The Day: U.S. Existing Home Sales @ 14.00 GMT
WHAT WE’RE WATCHING TODAY
U.S. Growth Evident But Consumers & Businesses Still Penny Pinching
The American job market is on the way up with an increase in hiring and U.S. manufacturers are growing faster. The economy finally seems to have emerged from its winter slow down and is now on an upbeat path….However, Americans are spending less than they used to, a big hindrance for an economy that relies heavily on consumers to generate growth. The slower pace of consumer spending can be traced to a prolonged period during which businesses have invested below their historical norm. Markets will get another look this week at whether the trends in consumer spending and business investment took a turn for the better in May but economists don’t expect a huge improvement. An update on new homes sales is due and the government is likely to report that the economy shrank even more sharply in the first quarter than previously estimated. Although an improving economy is visible, it still has a long way to go before a five-year-old recovery can be considered in good shape. These days, it’s not as easy for prospective buyers get a home loan as financial companies don’t want to make the same mistake they made before the recession by accepting customers who pose any credit risk. The third and final revision to first-quarter gross domestic product probably won’t bring any cheer the markets either as the government is expected to report that U.S. growth contracted by 2% instead of 1% as previously reported which would be the biggest decline since the tail end of the 2007-2009 recession.
The case for faster U.S. growth in the second quarter of 2014 and beyond rests on the hope that businesses and consumers will spend more although so far this year, companies haven’t toed the line. Business investment as measured by a category known as core capital goods fell in April and it’s only rising at a modest 3.5% rate over the past three months. Durable goods orders for May, released on Wednesday, is unlikely to show a marked shift in business investment either. As for consumers, they did more shopping in the early spring and spending is likely to rise in May, but spending is running at just two-thirds the typical rate this far into an economic recovery. Part of what’s holding them back is a paltry increase in wages even though more companies are hiring and job opening are at a post-recession high. After inflation is taken into account, wages are basically flat over the past year. Yet while Fed officials expect unemployment to fall even faster than they predicted just a few months ago, they haven’t changed their growth forecasts for the next two years. As market watchers know, faster U.S. growth depends on willingness to spend and invest…
Oil Gains On Increasing Iraq Violence
West Texas Intermediate rose for the third day and Brent gained as militants in Iraq seized more territory and President Obama warned that the crisis may spill over into other countries. August futures climbed as much as 0.6 percent in New York. A Chinese manufacturing gauge rose to a seven-month high in June, indicating that the economy of the world’s second-biggest oil user is picking up. WTI for August delivery rose by 62 cents to $107.45 a barrel. The July contract expired at $107.26 on June 20. The volume of all futures traded was about 1 percent above the 100-day average. Front-month prices have increased 8.9 percent this year. Brent for August settlement gained as much as 47 cents, or 0.4 percent, to $115.28 a barrel on the London-based ICE Futures Europe exchange. The European benchmark crude traded at a premium of $7.96 to WTI, from $7.98 on June 20.
Apple iWatch Due To Begin Production
Taiwan’s Quanta Computer will start mass production of Apple’s first smartwatch in July, as the company attempts to prove it can still compete against rival Samsung Electronics. The watch will be Apple’s first foray into a niche product category that many remain skeptical about, especially as to whether it can drive profits amid cooling growth in tech gadgets. Apple is expected to ship 50 million units within the first year of the product’s release. Mass production will start in July and the commercial launch will come as early as October. The company is accountable for at least 70 percent of final assembly. LG Display Co is said to be the exclusive supplier of the screen for the gadget’s initial batch of production. The iWatch also contains a sensor that monitors the user’s pulse for which Singapore-based imaging and sensor maker Heptagon is on the supplier list for the feature.
That sums up today’s highlights! Keep checking in for all the latest news on the day’s trading events via Facebook, Twitter, Google+ & LinkedIn. We hope you have a profitable day on the markets.
