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News / Analysis

Finance Update – Bears awakening?


Asia – China maintains interest

Asian indices are down this morning apart from the China A50, which added 1,95% and the Nikkei – 0.18%. The Hang Seng lost 1.6%.

The Yuan continues to rise – 82 pips in the past week alone pushing it to 16-month highs – after the Central Bank overnight maintained its 3.85% interest rate.

In New Zealand, Credit card spending failed to contract as far as expected, moving down by 11.9% YoY, rather than the 20% feared.

Europe – BoE contemplates the negative

European indices on Friday closed mainly down led by the IBEX’s 2.21% drop. The Dax and FTSE lost 0.7% and the CAC -1.22%.

Consumer inflation remains steady throughout the Eurozone, and Friday’s Current Accounts shows a non-seasonally adjusted increase of €8 bn to €25.5 bn in July – way beyond expectations. Italian industrial orders fell from 23.7% MoM in June to a disappointing 3.7% in July, while Germany’s PPI exceeded expectations in August by remaining at a level 0% growth.

ECB board member Isabel Schnabel told AFOP that failing to raise inflation could trigger additional stimulus on Thursday, while the bank’s VP Luis De Guindos said during a webinar the same day that interest rates remain a major tool in the bank’s arsenal to fight inflation.

Last week’s slightly bullish Pound tone seems quashed despite the Financial Times reported that Chancellor of the Exchequer Rishi Sunak intends to prolong the UK government’s business support loan program. At the root of the sterling’s weakness is the Bank of England’s Thursday decisions to maintain its 0.1% interest rate, but a policy summary that has traders expecting a possible delve into negative territory soon.

UK Retail sales increased by 2.8% MoM in July, slightly missing the expected 3, and house prices in September returned the previous month’s 0.2% decline MoM.

Americas – US is mixed

Equities across the nation remained red on Friday, the S&P losing 1.12$ followed by the Nasdaq at -1.07%.

US data as the week ended was mixed, jobless claims improving but slightly missing expectations on the initial front. Building permits in August failed to meet the expected 1.478 mn units by 60K and housing starts contracted by 5.1% after increasing by 18% the previous month.

Michigan U produced its preliminary consumer sentiment index for September – a better than expected 78.9.

Commodities – Germans refuse Blockchain oversight

After defining its new $41 support level, WTI is currently wedging south despite Baker Hughes report of yet another oil rig closed, bringing the active count down to 179.

Gold continues sideways in the 1950-1970 range as Reuters reports banks having so far this year amassed about $2.5 bn in profits from gold deliveries against futures during the COVID pandemic.

And, as Bitcoin grapples with the 11K resistance level, the Bundestag voted down a proposal to host major Euro projects in a Blockchain-based accounting environment to help prevent fraud – this following public dismay over the budget and design failures related to the new Berlin airport.

Corporate – is HSBC moving dirt again?

In related news, Nvidia (-2.2%) investors are suing the company for undermining non-mining hardware sales during the GPU market surge and leveraging that boom to sell “stocks at “artificially inflated prices”.

HSBC (-2.19%) seems to be up to its old tricks again, as BuzzFeed and other sources report complaints to the US Treasury’s Financial Crimes Enforcement Network that the bank has been moving about $2 tn worth of illegal funds to offshore havens.

And Rolls Royce (-4.2%) is seeking funding worth $3.2bn in either debt or share issuance after its aero business continues suffering from lockdown travel activity.

Confusion persists on the ByteDance deal with the Oracle/Walmart deal, after ByteDance announced that said deal leaves it owning 80% of TikTok Global – a newly-created US company that will own the app’s international activity, Reuters reports. The Walmart/Oracle consortium, on the other hand, contends that the majority of TikTok will be in THEIR hands. The new company is expected to list in the US for a $50 bn valuation.

Finally, Playboy may be returning to public exposure as its owner, Playboy Enterprises explores going public after its $207 mn buyback in 2011. Today, Shell (-2.7%) will be paying dividends, and FedEx (-0.53%) will hold a shareholders’ meeting.


ND Germany Buba Monthly report
12:30 PM GMT US Chicago Fed Activity Index. Brainard speech at 4 PM and Williams at 10 PM.
12:30 PM GMT Canada Housing Prices
ND UK Inflation Report


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