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News / Analysis

Finance Update – Markets Revert to Habit


Asia – China fearing US debt welching

Asian benchmarks are mostly up this morning, save the ASX, which is down 0.79% and the Hang Seng at -0.31%.

July’s PPI for Japan added another 0.6% MoM, and Australia’s unemployment rate increased a tick to 7.1%, pleasing analysts who had expected a 7.8% reading in July. The participation rate increased to 64.7%, and home sales surged by 170.6% MoM.

Meanwhile, Reuters reports that Chinese officials, fearing a US confiscation of debt to China, are increasing efforts to strengthen the Yuan’s presence in foreign markets – even proposing a settlement of COVID vaccines in digital Yuan rather than US dollars.

Europe – UK in recession – FTSE stars

With the UK now officially into a recession, the FTSE led European indices up yesterday, adding 2.04% during the session. The IBEX took the rear with a 0.45% increase.

The UK’s RICS house price balance index increased by 12% for the 1st time since the pandemic began after contracting in June by 13%. The surveyors’ organization, however, expressed concern that the reversal could reverse once the government’s jobs subsidy programme ends.

Italian CPIs missed the mark yesterday, and this morning’s July reading for German consumer inflation remained on par with the month before. The IFO institute polled businesses that expect the economy to revert back to normal within 11 months.

Americas – US maintains EU tariffs

The US government yesterday decided to maintain 25% tariffs on EU goods and 15% on Airbus products as talks continue to resolve trade differences.

US index futures are all negative this morning after the Nasdaq closed up 2.13%, the S&P at 1.4% and the Dow just over a per cent last night.

Yesterday data was generally good, mortgage applications up 6.8% this 1st week of the month; consumer inflation in July was up 1.6% YoY, the monthly budget statement revealed a $63bn surplus, and the 10-yr bond yield was up a fraction to 0.66%.

Commodities – Oil rise muted on OPEC expectations

WTI added 40 cents to the barrel yesterday after the EIA pleased punters with another 4.1 million barrel drawdown, before settling back down to lose half those gains. The movement was muted on OPEC’s report expecting demand to be even softer than expected.

Meanwhile gold remains stuck in a rut, having converged on the 1938 level in what could be a bull trap or a pause before returning north.

Corporate – Heineken reporting earnings

With most US company reports behind us, focus today shifts to Europe as Deutsche Telekom – buoyed by its Spirit acquisition this past year reports a 37% jump in revenue.

Cisco reported a 9% drop in revenues YoY to $12.2 bn and Lyft a 61% drop to $339 mn.

Still ahead, reports from Telefonica, ThyssenKrupp, Baidu, the Goodman Group, and Lanxess. Heineken will be paying dividends. Also, Direct Line Insurance announce their ex-dividend today.


07:00 AM GMT Spain CPIs
12:30 PM GMT US Jobless Claims & Import/Export prices
10:30 PM GMT NZ PMIs & House Prices.
11:50 PM GMT Japan Foreign Investments. Tertiary Industry Index at 4:30 AM (+1).
02:00 AM GMT (+1) China House Prices, Investments, Industrial Production & Retail Sales.


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