US pending home sales rises to a 10-year high

Daily Analysis - 27/05/2016

Pending sales of previously owned homes reflected by contract signing increased 5.10% in April

The National Association of Realtors' pending home sales data surged to the highest level in 10-years with the sales index rising to 116.3, last seen in February 2006. The spring buying season proved to be more robust than expected as the pending home sales in April beat analyst expectations of a 0.70% increase.

Australia capital expenditure slides in Q1

Australian private capital expenditure fell 5.20% on a seasonally adjusted basis in the first quarter of 2016, data from the Australian Bureau of Statistics showed on Thursday. In the quarter, capital expenditure was at A$30.613 billion, after rising to a revised 1.80% in the previous quarter. The decline of 5.20% missed analyst expectations of a 3.50% decline. On a yearly basis, capital expenditure was down 15.40%. Capex on building and structures was down 7.90% on the quarter posting an 18.80% decline on the year, while capex on plants, equipment and machinery was down 0.50% on the quarter to 9.20% on a yearly basis. The weaker capex is likely to weigh on the first quarter GDP data which is due for release on June 1st. In the previous quarter, Australia's quarterly GDP increased 0.60% rising to 3.0% on an annualized basis.

UK Q1 GDP unchanged at 0.40%

The second estimates for the UK's GDP showed no change, confirming that the economy grew at a modest pace of 0.40%, data from the Office for National Statistics showed on Tuesday. The GDP growth of 0.40%, quarter over quarter was slower than the 0.60% quarterly growth recorded in the last quarter of 2015. On a yearly basis, UK's GDP increased 2.0% a modest revision from the previous estimates of 2.10%. The revised data showed that construction output fell by a revised one percent, from the previous estimates of 0.90% and services industry grew at a pace of 0.60%. Production output was down 0.40% as expected. Business investment was also weak, falling 0.40% on a yearly basis.

US durable goods orders surge in April

Durable goods orders in the month of April increased 3.40% in April, according to the data from the US Commerce Department released on Thursday, beating expectations of a 0.70% increase. The durable goods orders gained as demand for aircrafts increased in the month. Excluding orders for transport, durable goods were up 0.40%, rising above estimates of 0.30%. Previous month's data was also revised higher to 1.90% on the headline and 0.10% on the core. Despite the better than expected data, business investment continued to show signs of weakness with orders in the nondefense capital goods falling 0.80% in the month and down 4.10% on a yearly basis, compared to the same period a year ago.

US GDP revisions and Janet Yellen’s speech

The markets will be turning their attention to the US data today with the second revision to the first quarter GDP expected to be revised to 0.90%. In the preliminary estimates, the first quarter GDP was recorded at 0.50%, marking a sharp slowdown in nearly two years. The previous quarter GDP grew at a pace of 1.40% in the last quarter of 2015. Following the GDP release, Federal Reserve Chairwoman Janet Yellen will be speaking and the markets will be looking for any clues on the upcoming Fed's meeting in June. The April minutes revived hopes for a rate hike in June if data supported the view. The data led to speculators increasing the rate hike probability in June, which had previously ruled out any chance for a rate hike in the month.