Daily Market Report - 05/01/2016

British lending to consumers expanded at the fastest annual rate in almost a decade in November and banks approved more mortgages than forecast, showing a buoyant mood among households towards the end of 2015. The Bank of England said net lending to consumers in November was up 8.3 percent compared with a year earlier, the biggest such increase since February 2006 and a growth rate that may raise concern at the Bank about lending standards. Lenders also granted more home loans than expected, with 70,410 mortgages for house purchase approved, the highest number in three months.

The figures add to signs that Britain's housing market is accelerating after a dip in mid-2014 when tighter rules on mortgage lending took effect, requiring banks and building societies to make more rigorous checks on whether borrowers can afford their loans.

German Consumer Price Index showed a disappointing start to the year for Eurozone data yesterday, with the MoM showing a -0.1% decrease from the 0.1% previous, which was a disappointment considering the consensus was for a 0.1% growth. The yearly figure showed once again a contraction, with a release of 0.3% against a 0.6% expectation.

The Eurozone manufacturing sector continued its recovery right up to the end of the year, with every country clocking in with output growth and job creation in December. The release showed a reading of 53.2 in December, which is now the best month for Europe since April 2014.

WTI Crude oil has posted sharp losses on Monday, with crude greeting the New Year by sliding over 3 percent. The sharp drop was in response to a new crisis in the Middle East between Iran and Saudi Arabia, two major oil producers.

The US economy improved in 2015, but there are sectors which have lagged behind the recovery, such as the manufacturing sector. Recent manufacturing releases have missed expectations, and the negative trend continued on Monday. ISM Manufacturing PMI slipped to 48.2 points, well short of the forecast of 49.1 points.

Key Announcements
10:00 – EUR: Consumer Price Index (YoY) expected to increase to 0.4% from 0.2%