Daily Market Update

Daily Market Update

Daily Market Update Markets await Yellen testimony
US stock futures and European markets were down slightly this morning as markets await Fed chair Janet Yellen’s appearance before Congress. Experts are not predicting any major changes from current policy. Her testimony at 10am EST will be watched for clues on interest rates and the timings of any rises. There is also US retail news due today and expected to show growth and the Empire manufacturing index.  European data has not given much cheer to markets of late with German consumer confidence down for the seventh month in a row and UK inflation up more than expected. Asian stocks were largely up on Tuesday, boosted by optimism on US investment profits.

News breaking of tobacco firms deal
A predicted deal between two of the largest US tobacco firms looks set to be going ahead. Reports this morning say that Reynolds American has agreed to buy Lorillard for $27.4 billion. Some brands from the combined company will be sold to UK based Imperial Tobacco for $7.1 billion to satisfy competition regulators. Read the full story.

Brent crude hits three-month low
Despite continuing unrest in the Middle East, the price of oil has fallen again with Brent crude for August delivery down 0.9 per cent to $106.08 per barrel on ICE Futures Europe, that’s a 3 month low. The price had risen to just short of $116 last month. Yesterday oil prices were up following fresh concerns over Libya’s oil supplies which have only just resumed after a year of disruption. US oil futures were also down slightly this morning. Read the full story. 

Trans-Atlantic trade talks resume in Brussels
Hopes of a new trade pact between the US and European Union grew yesterday as a new round of talks began in the EU’s home city of Brussels. With many years of restrictions and trade barriers to break down, the talks have big aims, but politics and economics don’t always sit easily together. One of the central pillars of the talks is the automotive industry which is under fire on both sides of the Atlantic from Asian manufacturers. Vehicles make up a large percentage of current trade between the US and the EU and more freedom would of course be welcomed. Currently vehicles are frequently shipped from Europe in pieces to be assembled in the US; it’s inefficient and means US consumers pay more, and similar restrictions cause issues for US exporters to Europe. Any new trade agreement will be expected to create greater opportunity for both partners while seeking to protect domestic jobs; not always an easy one to win. Read the full story.

Hotel industry wakes up after long sleep
The hotel business was hit hard by the recession but figures for the first five months of 2014 show things are picking up fast. Data from Smith Travel Research shows that the hotel sector is on track to record its highest ever level of rooms booked. Having suffered from a lack of funding for construction and a downturn in occupancy, hotels in the US are no longer struggling to fill their rooms. Although it’s worth noting that the construction slowdown means there are fewer rooms than the industry had hoped for, the profit per room is also up; a good indication of the industry’s health. Read the full story.

Banks exposed to the threat of a downturn
Canada’s banks could find themselves in crisis if a housing market crash was to happen. A report from investment analysts Morningstar says that the likelihood of higher interest rates, falling prices and a slower market at some time in the next year or so could lead to a high level of defaults. The Royal Bank of Canada and CIBC would be hit the hardest. Morningstar predict that there will be a correction in the market within the next five years and are suggesting that it could see property values fall by as much as 30 per cent. Read the full story.