It was a holiday shortened trading
week for the US, thanks to Independence Day. Durable Goods Orders (goods
designed to last at least 3 years) eased by 0.2% in May, on top of the
4.7% slide in April. Average US wages over the past 12 months have
increased by 3.9%, whilst the latest non-form payrolls number, showed US
jobs growth at 121,000 in June versus an expected 174,000 figure. This
brings the Q2 ’06 average at 108,000 versus the Q1 ’06 176,000. On the
property front, Manhattan apartment sales fell by 15% in Q2 ’06,
according to Miller Samuel Inc, a 5 year low. Unsold units climbed by
54%, the highest level since 1994, yet the average price paid for an
apartment rose by 5.2% to a record $1.39m.
It was a bumpy shorted trading week for stocks, adversely affected by
both the S. Korean missile launch and the disappointing jobs data. Over
the week the Dow and the S&P 500 eased by 0.5% and 0.4% respectively,
whilst the Nasdaq Composite fell by 2%.
Euro land’s main event was for interest rate decisions from the Bank of
England’s MPC and the ECB. Contrary to the recent Bank of International
Settlements (the central bankers, central bank) advisory note that
central banks would have to move faster in raising rates to head off
inflationary concerns, both left interest rates on hold, albeit that the
ECB did flag a likely rise in August. The UK’s largest mortgage
provider, the Halifax, announced a 1.2% fall for the average UK house
price in June. It was a good week for European airline operators,
despite record high oil prices, as most airlines reported increased
passenger numbers for June. Ryan Air, the Irish budget airline and its
UK counterpart, Easyjet, saw their respective share price jump by 8.5%.
Amongst the ‘national’ carriers, Air France-KLM, saw a 7% traffic
increase and were rewarded by a 0.7% share price rise. For the week, the
UK FTSE 100 index gained 1%, whilst the French CAC 40 lost ¼% and the
German Dax remained level.
Out East, the Bank of Japan’s Tankan survey showed an upbeat expectation
for companies, which no doubt assisted in the cabinet’s office revised
real GDP number for 2006 at 2.1%, up from January’s 1.9% estimate, not
to mention Japan’s May leading economic index rise to 75 in May from
April’s 55. Shares of the Bank of China Limited jumped by 31% as they
started trading in Shanghai. The 20 billion Yuan IPO lured in bids of
677bn Yuan ($85bn). Elsewhere, Hong Kong apartment sales fell by more
than a third (by value) in June, apparently due to rising interest
rates. For the week, Japan’s Nikkei fell by 1.3% whilst the Hang Seng
gained 1.2%
The $US index eased by 0.2% over the week and saw a 1 month low against
the Euro, whilst 5 and 10 year US Treasury yields ended the week +0.2%
and -0.1% respectively.
Within the commodities complex, the Oil futures price reached a record
high of $75.78 a barrel, before ending the week at $74 or 0.4% higher on
the week. During this 3 day trading week, the $Gold price gained $18oz
or 2.2%, ending it at $630oz.
Next week sees the G8 Summit gathering in St. Petersburg, Russia. The
latest trade data is released for the US, UK and the wider Euro Zone as
are retail sales. The latest Euro zone inflation data is due to be
released, as are consumer confidence outlooks for the US and Japan.
By the time this goes to press, we will know the result of the 2006
World cup final between France and Italy. Sponsors have clambered over
each other to be involved in the 2010 World Cup in S. Africa, paying
$1.4bn for the privilege, up by 40% from this year’s event. Mastercard
Inc was ‘booted’ out by Visa International Inc. to become the official
financial services company of international tournaments starting next
year, by paying $200m.
“A
fool and his money are easily parted”
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