Thungen Financial 2nd June 2014 - Global Index Update

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Thungen Financial 2nd June 2014 - Global Index Update

Asian markets started the week well after manufacturing data out of China came in better than expected. Late last month HSBC's PMI data showed a potential 49.7, it is to be noted that HSBC look to smaller or medium manufacturing companies, the data release this weekend was governmental and deals with larger and/or state owned companies. Ultimately the PMI came in at 50.8, up from 50.4 in April, beyond analysts expectations. It is fair to say that the governments growth policies undoubtedly helped get manufacturing back on track, along with several programs designed to stabalise the Chinese property market. Housing prices fell for the 2nd month in a row, down just 0.03% on the month before however they have still increased by 5.8% over the course of the last year. The government has acknowledged that the property industry, which affects almost 40 other sectors needed to stabalise and in an effort to rein it in they have forced local banks to speed up their mortgage lending processes and several local governments have lifted some purchase restrictions. The weekend news helped spur the local markets with the Nikkei being the biggest gainer, posting a strong 2.07% gain for Monday trading.

European markets are expected to open slightly higher, following on from the good news out of China and the expectations for the up and coming ECB meeting in Frankfurt on Thursday. Last week was a good spell for the majority of European indexes which are still flirting with yearly highs and some close to all time records. If Mario Draghi does announce the stimulus plan that everyone is waiting on, there should be an extended run in the markets, however we can expect some investors to look to lock out some profits as they weigh out the true meaning behind the stimulus that the ECB has hinted it will implement. Spain, who emerged from recession late last October has announce plans for a new stimulus, amounting to €6.4Bn. The stimulus, which will be both public and privately funded is needed to combat the serious unemployment rate in the country and to address new investment. With the 2nd highest unemployment rate in Europe and with almost half of the workforce under 24yrs of age being unemployed, the country needs to drag its economy back to the golden days of expansion and property development. With first quarter GDP up 0.6% (its fastest paced in 3yrs)Spain is intent on bringing foreign investment back to the region and they intend to reduce Corporation Tax to 25% from 30% in an effort to give big business a reason to return to the Spanish economy.

Markets in the US finished off their Bull run week with the S&P 500 making its 4th highest close out of five sessions. Despite some poor data on their GDP the markets kept the positivity going and as the FED keeps reducing its bond buying program and promises of the ECB places stimulus where its needed helped push value stocks to the front of the queue. GDP for the first quarter of 2014 was just 1%, its lowest since first quarter of 2011 and vastly reduced form the growth seen in the last quarter of 2013 which saw 2.6%. A lot has been placed on the weather and the fact that it was one of the coldest spells in 20 years with the cost to GDP being quoted at almost 1.5% for the period the government has stated that they will do everything they can to address this and get the economy back on track. What is usually a low volume, low volatility month, May 2014 was a record braking month on many levels for the US indexes and as June starts, the optimists will look to keep the gains coming and look to add more value.

Asian Markets as of 2nd June 2014:

Nikkei 14,935.92 +2.07%          SSE Comp. 2,039.21 -0.07%

Hang Seng 223,081.65 +0.31%

ASX 5,499.20 +0.46%

European Markets as of 2nd June 2014

FTSE 6,844.51 -0.39%          Dax  9,943.27 -0.24%

CAC40 4,519.57 -0.24%          BEL20 3,159.10 +0.05%

Zurich SMI 8,674.52 -0.37%      MICEX 1,387.56 -0.69%

US Markets as of 2nd June 2014

S&P500 1,923.57 +0.18%          Dow Jones 16,717.17 +0.11%

NASDAQ 4,242.62 +0.42%

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DISCLAIMER  The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Thungen Financial Advisors. All market data within this release is for your general information and enjoys indicative status only. Thungen Financial Advisors does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.