Finance Update – Earnings gather steam

Asia – Another shot in the Aussie-China saga

Most Asian indices are red this morning, the Hang Seng down by 1.32%, the Nikkei -0.52% and only Australia’s ASX (+0.5%) and the Shanghai Composite (+0.06%) in the green.

Chinese citizens will be cold this winter after their government instructed power plants and other manufacturers to cease importing coal from Australia – this as Australia’s Westpac initiates a restructuring aimed at winding up operations in China. Australia supplies about 40% of China’s coal, 25% of its coal exports.

Chinese Consumer InflationThe rise in prices for goods and services, resulting in the deterioration of a currency’s purchasi... overnight grew by 0.2% in September MoM, missing expectations by a tickAn asset’s minimal unit of measurement and price change., while Australia delivered a better-than-expected increase in unemployment – 6.9%. The AUD plunged about 70 pips after the nation’s central banker, Philip Lowe said he might lower rates by 10 basis points.

In Japan, foreign investments in stocks tripled to ¥1421 bn at the start of October, and the tertiary industry index increased by 0.8% MoM in August after a ½% contraction in July.

Europe – EU threatens UK trade

With both the IMF and European Council meeting tonight, major European benchmarks were led down yesterday by the FTSE’s -0.58%. The DAX managed to scrape a 0.07% gain.

Industrial production throughout the Eurozone contracted by a disappointing 0.7% MoM in August.

Reuters reports EU leaders threatening a trillion euros’ worth of trade unless the UK offers concessions on fisheries, competition and dispute resolution components of the Brexit dialogue.

Americas – Fed deficit triples

With med-makers halting trials, relief programmes winding down and COVID resurgences all over the globe, US indices continued down yesterday led by the NASDAQ at -0.8%.

The USD is up a fraction after Producer inflation pleasingly increased by 0.4% MoM in September, pulling the yearly quote out of contraction, bringing the cumulative debt to $3 tn in 2020 so far.

Vice Fed Head Randal Quarles yesterday said the US recovery was stronger than anticipated, half the jobs loft having been since regained. Vice head Clarida added that GDP would not returnThe benefit one receives on an investment. to pre-COVID levels within less than a year. Meanwhile, Treasury Secretary Mnuchin told reporters that a new stimulus bill before November 3 elections was doubtful.

Congress’ budget office revealed that the federal budget deficitA trade balance that is negative as a result of cost (imports, on the national level) being greater ... had tripled to $200 bn during the month of August.

Commodities – Oil recovers

Oil continued its recovery yesterday peaking at 41.29 per barrel of WTI after the API delivered a very welcome 5.42 mB withdrawal in the 1st week of the month, continuing its zigzag.

Corporate – Wells fires relief scammers

Following in the footsteps of other major banks last month, Wells Fargo (-6.02%) reportedly has fired over 100 employees for alleged “COVID relief fund misuse”. In its earnings report yesterday the bank revealed a 14% drop YoY in revenues and an EPS of 42 c – down 54%.

BoA (-2.33%) revenues fell by 11% YoY to $20.3 bn and EPS -9%YoY to 51 c. Goldman (+0.2%) actually reported a 30% surge in revenues to $10.78 bn translating into a 102% rise in earnings to $9.68 per share. UnitedHealth added 8% to its revenues ($65.1 bn) while EPS fell 10% YoY to $3.30. Across the Pacific, the Bank of Queensland (2.23%) reported a 1% increase in revenue t $1.096 bn and a 30% drop in earnings.

Today, expect quarterly earnings from Morgan Stanley and Walgreens, and dividends from Ericson, Quanta Services and Sempra Energy.

Events