German Construction Sector Expands At Faster Pace

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 Germany's construction sector activity expanded at the fastest pace in four months in May, survey data from IHS Markit showed Wednesday.

The construction Purchasing Managers' Index rose to 53.9 in May from 50.9 in April. Any reading above 50 indicates expansion in the sector.

The sector continued to rebound from a weather-related downturn at the end of the first quarter.

Of the three broad areas of activity monitored by the survey, both residential and commercial sectors registered the strongest rate of growth since January. Meanwhile, civil engineering activity remained in contraction.

New orders increased and construction companies continued to raise employment in order to expand capacity.

However, the rate of job creation eased to a 15-month low amid reports from surveyed firms of difficulties finding suitably skilled staff.

"With the survey continuing to highlight difficulties finding skilled staff as well as another sharp deterioration in sub-contractor availability, constructors have become a little less optimistic about the outlook," Phil Smith, Principal Economist at IHS Markit, said.

Asian Shares Edge Up In Cautious Trade

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Asian stocks finished mostly higher on Wednesday as higher commodity prices lifted resource stocks and the Japanese yen weakened on solid U.S. non-manufacturing activity data released overnight. Nevertheless, renewed trade concerns helped to limit overall gains to some extent.

China's Shanghai Composite index finished marginally higher at 3,115.18 while Hong Kong's Hang Seng index gained half a percent to close at 31,259.10. South Korean markets were closed for the Memorial Day holiday.

Japanese shares hit a two-week high as technology stocks followed their U.S. peers higher. The Nikkei average closed up 86.19 points or 0.38 percent at 22,625.73 after hitting as high as 22,662.82 earlier in the day, its highest level since May 23. The broader Topix index closed 0.15 percent higher at 1,777.59.

Exporters like Panasonic, Toyota Motor and Sony climbed 1-3 percent. Sharp Corp gained about 1 percent after it agreed to acquire Toshiba's personal computer business for 4 billion yen, or $36 million. Subaru Corp shares shed 1.4 percent after the automaker said it found more cars affected by data fabrication.

Australian shares finished modestly higher after the Nasdaq Composite index hit a record high for the second consecutive session overnight. The benchmark S&P/ASX200 index rose 30.20 points or 0.50 percent to 6,025.10 while the broader All Ordinaries index ended up 28.90 points or 0.47 percent at 6,137.40.

Higher base metal prices helped lift miners, with BHP Billiton, Fortescue Metals Group and Rio Tinto closing up between 1 percent and 2.5 percent. Gold miner Newcrest Mining rallied 2.1 percent after an increase in gold prices.

Energy stocks like Woodside Petroleum, Santos Oil Search and Origin Energy jumped 2-3 percent after crude oil futures rose more than 1 percent on Tuesday.

ANZ slid half a percent after criminal charges were laid against the bank. The other three big banks dropped 1-2 percent.

Metcash fell 2.2 percent after the IGA supermarkets supplier said it would take a $352 million impairment in its full-year results.

On the data front, Australia's gross domestic product gained a seasonally adjusted 1.0 percent sequentially in the first three months of 2018, the Australian Bureau of Statistics said.

That beat expectations for an increase of 0.8 percent following the 0.4 percent gain in the previous three months. On a yearly basis, GDP expanded 3.1 percent, up from 2.4 percent in the three months prior.

New Zealand shares hit a record high as investors lapped up shares of companies offering hefty dividends. The benchmark S&P/NZX 50 rose 56.41 points or 0.64 percent to 8,813.45, with Ryman Healthcare and F&P Healthcare closing up 2.1 percent and 3.5 percent, respectively.

The volume of total building activity in New Zealand dropped a seasonally adjusted 0.9 percent sequentially in the first three months of 2018, Statistics New Zealand said. That was well shy of forecasts for an increase of 0.5 percent.

Separately, the results of a survey by ANZ showed that New Zealand's commodity prices increased for the fifth straight month in May.

India's Sensex was rising 0.6 percent ahead of the repo rate decision by RBI. Indonesia's Jakarta Composite index was declining 0.2 percent and Singapore's Straits Times index was losing half a percent, while Malaysia's KLSE Composite index was gaining 0.9 percent and the Taiwan Weighted added 0.9 percent.

Overnight, U.S. stocks ended narrowly mixed as figures on the labor market and services sector activity strengthened the case for a Federal Reserve interest increase next week.

The tech-heavy Nasdaq Composite rose 0.4 percent to reach another fresh record closing high amid gains in technology shares like Apple and eBay.

ECB's Praet Sees Signals Of Inflation Converging Towards Target

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European Central Bank Executive Board member Peter Praet sees signs of inflation converging towards target.

"Signals showing the convergence of inflation towards our aim have been improving, and both the underlying strength in the euro area economy and the fact that such strength is increasingly affecting wage formation supports our confidence that inflation will reach a level of below, but close to, 2% over the medium term," Praet said at the Congress of Actuaries, in Berlin on Wednesday.

He said any decision concerning the termination or further extension of net purchases will hinge on the ultimate judgement of the Governing Council.

Praet noted that low interest rates fundamentally reflect the consequences of unfavorable secular trends, combined with the fall-out from the global financial crisis and euro area sovereign debt crisis.

Australia GDP Climbs 1.0% On Quarter In Q1

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Australia's gross domestic product gained a seasonally adjusted 1.0 percent on quarter in the first three months of 2018, the Australian Bureau of Statistics said on Wednesday.

That beat expectations for an increase of 0.8 percent following the 0.4 percent gain in the previous three months.

On a yearly basis, GDP expanded 3.1 percent - again beating forecasts for 2.8 percent and up from 2.4 percent in the three months prior.

Exports of goods and services contributed 0.5 percentage points to GDP growth.

"Growth in exports accounted for half the growth in GDP, and reflected strength in exports of mining commodities," ABS Chief Economist Bruce Hockman said.

Mining industry gross value added grew 2.9 percent during the quarter. Production of coal, iron ore and liquefied natural gas showed strong increases.

Private non-financial corporations profits increased 6.0 percent in the March quarter, the strongest increase in the past year.

"The rise in profits was consistent with the strong increase in mining exports coupled with a lift in the terms of trade this quarter," Hockman added.

Private investment contributed to GDP growth with continued strong investment in machinery and equipment and was particularly strong in the non-mining sector. Growth in the construction of new dwellings fell slightly, but the recent high levels continued, consistent with the number of building approvals observed in recent months.

General government final consumption expenditure increased 1.6 percent and was up 5.1 percent through the year. Public investment fell slightly but remained at elevated levels.

Household consumption grew 0.3 percent driven by rises in non-discretionary items and grew 2.9 percent through the year. The household savings ratio fell to 2.1 per cent and was at its lowest rate since December 2007. The savings ratio declined over the past decade but the rate of decline has moderated in the past 4 quarters.

Compensation of employees increased 1.2 percent, while gross operating surplus increased 4.0 percent and terms of trade rose 3.3 percent.

Norway's Current Account Surplus Grows In Q1

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Norway's current account surplus increased notably in the three months ended March, figures from Statistics Norway showed Wednesday.

The current account surplus climbed to NOK 61.0 billion in the first quarter from NOK 40.2 billion in the previous quarter.

The surplus also rose from NOK 57.6 billion in the corresponding period last year.

The goods and services trade surplus for the March quarter was NOK 36.5 billion versus NOK 29.4 billion in the December quarter.

Balance of income and current transfers came in at a surplus of NOK 24.5 billion in the first quarter, up from NOK 10.7 billion in the fourth quarter.

Ireland Services Growth Strongest In 4 Months

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Ireland's service sector activity expanded at the fastest pace in four months in May, driven by strong increase in new orders, survey data from IHS Markit showed Wednesday.

The seasonally adjusted Investec services Purchasing Managers' Index rose to 59.3 in May from 58.4 in April. Any reading above 50 indicates expansion in the sector.

New orders grew strongly in May amid improving economic conditions, but also attributed higher activity to favorable weather. But the rate of growth was slower than in April.

The rate of job creation also eased, but remained marked.

On the price front, input prices continued to rise sharply in May, while the rate of output price inflation eased to a 19-month low amid reports of competitive pressures.

Asian Markets Mostly Higher

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Asian stock markets are mostly higher on Wednesday following the mostly positive cues overnight from Wall Street and as higher commodity prices lifted resources stocks.

Nevertheless, lingering worries about global trade wars and Italy's debt weighed on the markets. Italy's new leadership said they want to boost spending and cut taxes rather than pursue austerity in order to get the nation's debt under control.

The Australian market is advancing, reflecting gains in mining and oil stocks, while banking stocks are weak. Better-than-expected Australian GDP data also boosted sentiment.

In late-morning trades, the benchmark S&P/ASX 200 Index is adding 25.60 points or 0.43 pecent to 6,020.50, off a high of 6,025.60. The broader All Ordinaries Index is up 24.10 points or 0.39 percent to 6,132.60.

In the banking space, Westpac, Commonwealth Bank and National Australia Bank are lower in a range of 0.2 percent to 0.8 percent.

Shares of ANZ Banking are down 0.2 percent after the Australian Competition and Consumer Commission or ACCC confirmed late Tuesday that ANZ Banking, Deutsche Bank and Citigroup have been charged with criminal cartel offences in relation to an August 2015 share placement.

The major miners are higher, aided by an increase in iron ore prices. BHP Billiton and Rio Tinto are rising more than 2 percent, while Fortescue Metals is adding more than 1 percent.

Gold miners are also advancing after an increase in gold prices. Evolution Mining is rising more than 1 percent and Newcrest Mining is adding almost 2 percent.

Oil stocks are mostly higher as crude oil prices rose more than 1 percent overnight. Woodside Petroleum is up more than 1 percent and Oil Search is higher by 0.4 percent, while Santos is down 0.3 percent.

Shares of Metcash are down 3 percent after the supermarkets supplier said it will record impairment charges of A$352 million following the decision of a South Australian supermarket customer to not renew its contract.

In economic news, the Australian Bureau of Statistics said that Australia's gross domestic product was up a seasonally adjusted 1.0 percent on quarter in the first three months of 2018. That exceeded expectations for an increase of 0.8 percent following the 0.4 percent gain in the previous three months.

In the currency market, the Australian dollar is almost unchanged against the U.S. dollar on Wednesday. The local unit was trading at US$0.7633, compared to US$0.7638 on Tuesday.

The Japanese market is edging higher after a weak start following the mostly positive cues from Wall Street and on a slightly weaker yen.

In late-morning trades, the benchmark Nikkei 225 Index is adding 23.52 points or 0.10 percent to 22,563.06, after touching a low of 22,498.59 in early trades.

Among the major exporters, Sony and Panasonic are higher by more than 1 percent each, while Mitsubishi Electric is declining more than 1 percent and Canon is down 0.3 percent.

Automaker Toyota is rising more than 1 percent and Honda is edging higher by less than 0.1 percent.

Shares of Subaru Corp. are down more than 1 percent after the automaker said Tuesday it has found new cases of product data fabrication, bring the total number of affected vehicles to 1,551 from the previously reported 903. Yasuyuki Yoshinaga will step down as president and CEO to take responsibility for the inspection scandal.

In the banking sector, Mitsubishi UFJ Financial is lower by 0.7 percent while Sumitomo Mitsui Financial is up 0.1 percent.

Sharp Corp. has agreed to acquire Toshiba's personal computer business for 4 billion yen, or $36 million. Shares of Sharp are advancing more than 1 percent, while Toshiba's shares are down 0.3 percent.

Among oil stocks, Inpex is adding 0.8 percent and Japan Petroleum is higher by more than 1 percent after crude oil prices rose overnight.

Among the market's best performers, Nippon Electric Glass is gaining more than 5 percent, Mitsui Mining & Smelting is higher by almost 4 percent and Toho Zinc is up 3 percent.

On the flip side, Tokai Carbon is losing almost 5 percent and Okuma Corp. is down more than 4 percent. Fanuc, Kyowa Hakko Kiron and Daikin Industries are all lower by more than 2 percent each.

In economic news, Japan will provide April numbers for labor and real cash earnings today.

In the currency market, the U.S. dollar is trading in the upper 109 yen-range on Wednesday.

Elsewhere in Asia, New Zealand, Malaysia, Hong Kong and Taiwan are also higher, while Shanghai, Singapore and Indonesia are lower. The markets in South Korea are closed on Wednesday for the Memorial Day holiday.

On Wall Street, stocks closed mixed in choppy trading on Tuesday, with the tech-heavy Nasdaq reaching another new record closing high. The lack of direction shown by stocks came as traders seemed to be expressing some uncertainty about the near-term outlook for the markets.

An upcoming G-7 summit in Canada as well as the planned meeting between President Donald Trump and North Korean leader Kim Jong Un next week also kept some traders on the sidelines.

While the Dow edged down 13.71 points or 0.1 percent to 24,799.98, the Nasdaq climbed 31.40 points or 0.4 percent to 7,637.86 and the S&P 500 inched up 1.93 points or 0.1 percent to 2,748.80.

The major European markets also turned in a mixed performance on Tuesday. While the German DAX Index inched up by 0.1 percent, the French CAC 40 Index edged down by 0.2 percent and the U.K.'s FTSE 100 Index fell by 0.7 percent.

Crude oil futures rebounded Tuesday amid bargain hunting after steep recent losses. WTI crude added $0.77 or 1.2 percent to $65.52 a barrel on the New York Mercantile Exchange, after hitting a 2-month low.

EU will hit Republican voters to fight trade war

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The European Union will target consumer, agricultural and steel products made in many key Republican constituencies when it imposes tariffs against US imports in retaliation for punitive duties US President Donald Trump announced yesterday.

The Trump administration's tariffs on imports from key allies sent US and European stocks into a tailspin and stoked demand for the safety of government bonds.

The US president's escalation of trade tensions with Canada, Mexico and the European Union hammered American industrial and financial shares.

The Trump administration's unilateral action upended the global trade order and was met with retaliatory actions that could imperil economic growth.

The ratcheting up of tension overshadowed reports that Italy is close to forming a government that is more EU-friendly than investors had feared.

The Trump administration hit the EU, Canada and Mexico with 25pc duties on imported steel and 10pc on aluminium in Washington's most aggressive trade action yet against allies.

Washington claimed it was acting to protect national security, an assertion members of the EU have dismissed. Ireland risks being on the front line if the trade war heats up.

A presentation circulated by the National Treasury Management Agency (NTMA) yesterday shows the US is our biggest single trading partner - followed by the United Kingdom.

Last night Brussels said it will impose retaliatory tariffs on €2.8bn of selected American imports as soon as June 20. Harley-Davidson motorbikes and bourbon whiskey, both produced in districts supportive of the ruling US Republican Party are expected to be among the goods slapped with import duties.

Europe will also take its case to the World Trade Organisation (WTO).

"The US now leaves us with no choice but to proceed with a WTO dispute settlement case and with the imposition of additional duties," European Commission President Jean-Claude Juncker said. "We will defend the Union's interests, in full compliance with international trade law."

The Republican speaker of the House of Representatives, Paul Ryan, is from Wisconsin, home of Harley-Davidson, and Senate Majority Leader Mitch McConnell is from Kentucky, where bourbon whiskey is made.

Harley-Davidson said it will suffer as a result of tariffs.

"We support free and fair trade and hope for a quick resolution to this issue," the bike-maker said in an emailed statement. "A punitive, retaliatory tariff on Harley-Davidson motorcycles in other major markets would have a significant impact on our sales, our dealers, our suppliers and our customers in those markets."

The dispute is likely to dominate a meeting of finance ministers from the Group of Seven nations in Canada. The US has just slapped tariffs on five of it six counterparts, including the host.

"We are deeply disappointed that the US has decided to apply tariffs to steel and aluminium imports from the EU on national security grounds," the UK government said in a statement.

Germany "rejects the tariffs imposed by the US on steel and aluminium," Chancellor Angela Merkel's chief spokesman said in emailed statement.

"We consider that this unilateral measure is unlawful, and that the national security concerns given as the reasons can't be upheld," the spokesman added. "The measures instead carry the risk of creating a spiralling escalation that will harm everyone."

French officials said the EU isn't seeking a trade war but has no choice but to impose "re-balancing" tariffs on selected US exports. The finance officials said it was hard to envision talks happening with the tariffs in place.