This content is from: Portfolio

Daily Agenda: Euro Inflation Remains Muted Ahead of ECB Meeting

Unemployment and prices fall in Germany; Audi drives Volkswagen quarterly profit; another Chinese flash crash; Jazz proposes Celator buy.

The headline unemployment rate for May released today by the Germany Federal Labor Agency contracted to 6.1 percent — the lowest reading since the reunification of East Germany after the Cold War. The good news arrives after GDP data released last week confirmed that the largest economy in the European Union is growing at its fastest pace in years. Separately, data from Eurostat released this morning revealed that consumer prices for the common currency zone fell by 0.1 percent year-over-year, marking the fourth consecutive annual contraction. As European Central Bank president Mario Draghi and his colleagues convene later this week for a monthly monetary policy update, the question on many investors’ minds is what more can be done? Negative rates and slowly recovering activity in the primary economies have done little to spur inflation or a rapid rebound in the periphery of the EU.

Volkswagen returns to profit. Germany-based automaker Volkswagen today announced a profit for the first three months of 2016 that fell short of analysts’ targets at $2.37 billion. The statement stressed that management at the company continue to have confidence that there is sufficient liquidity to meet any liabilities springing from the ongoing emissions scandal. As has been the case in recent years, high margins from the Audi franchise drove overall profits.

Chinese equities experience another flash crash. Futures for the CSI 300 traded on the China Financial Futures Exchange in Shanghai plummeted suddenly this morning, with contracts for front-month delivery losing more than 10 percent in market value before recovering within minutes. According to market analysts, the sudden sell-off was driven in part by seasonally low liquidity.

Another Brazilian official resigns. For the second time in a week, a senior member of Brazil’s newly formed government has stepped down following revelations of a connection to the ongoing Petrobras graft scandal. Fabiano Silveira, who was asked by newly installed President Michel Temer to head up an anticorruption initiative, quit after media outlets revealed recordings that suggest he attempted to quash investigations into the state oil company.

“Remain” stays in the lead. As the days count down to the U.K. referendum on European Union membership, a poll sponsored by The Daily Telegraph over the weekend revealed a 5 percent lead for the movement to remain within the block. Separately, recent polls have suggested that Labour Party officials have failed to provide a clear outline of their stance on the topic.

Another big pharmaceutical merger. Jazz Pharmaceuticals today announced an agreement to acquire U.S.-based cancer drug developer Celator Pharmaceuticals. The proposed acquisition is a cash merger valued at more than $1.5 billion and would provide Jazz access to Celator’s leukemia treatment.

Related Content