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Finance Update – Seasonal surprises


Asia – Tensions easing

Asian indices are all remarkably up this morning, the China !50 adding 4.52% placing markets at a 2-year peak. Only the Nikkei is in the red with a 0.31% loss as the Yen strengthens to the tune of 13 pips against the USD.

The weekend saw some positive figures from Japan, household spending contracting by 6.9% YoY in August – up from July’s -7.6%, the cash earnings contraction also improving and Ecowatchers sentiment surveys up 6 points each in September. Machinery orders in August surprised positively with a 0.2% increase MoM. However, Producer inflation contracted by 0.2% MoM in September.

Business confidence and activity outlooks for October also improved dramatically in New Zealand, the latter expanding by 3.6% following September’s 5.4% contraction. Visitor arrivals for this tourism-dependent land contracted by 96.9% in August – better than the 114% expected and July’s 98.5%. And home loans and investments in Australia also improving to 13.6% and 9.3%, respectively.

Europe – London selling Milan

As the London Stock Exchange prepares to sell the Italian Borsa Italiana to France’s Euronext for about €4.3bn, European indices were mainly up yesterday led by the AEX’s 1.29%. The deal is one requirement that will allow the LSE to purchase Thomson Reuter’s Refinitiv – a global provider of financial market data and infrastructure in a deal worth £21 billion.

Contrary to disappointing trade numbers from Germany the day before, the UK in August surprised to the upside with a non-EU trade deficit that contracted only to £-2.308 B – ½ a billion better than expected. The total trade surplus contracted to £1.364 B while GDP expanded by 2.1% – half the expected, and manufacturing production contracted by a worse-than-expected 8,4% YoY.

Industrial output in France disappointed with a 1.3% increase while in Italy produced a 7.7% increase on expectations of a mere 1.3%.

Americas – Markets liking Biden

US indices continue up, the Nasdaq adding 1.39% yesterday, strangely as Biden widens his margin over the incumbent, increasing hopes for a post-election stimulus bill.

Continuing jobless claims for the last week of September came in a tad better than expected, at 10.976mn claimants while the initial figure disappointed with 840K new applicants. Wholesale inventories dropped a tick to 0.4%.

With no data today, Columbus Day, the USD continues down after Democrats rejected Trump’s latest Corona bill saying it provides no assistance to frontline workers, testing and childcare.

North of the border, unemployment in Canada improved to 9.2% in September with the participation rate up ½ a per cent. Today Canadians celebrate Thanksgiving.

Commodities – Digi-Yuan lottery opens

Gold over the weekend broke through support at 1923 on dollar weakness and is currently battling resistance at 1936.

And oil is down 0.8% after Baker Hughes delivered a 4-rig increase to 193 active drilling platforms in the US.

All major cryptos are up this morning after the Shenzhen municipality announced a lottery that will give away about $1.47mn-worth of digital Yuans. The recent 12-month pilot project resulted in over a billion yuans’-worth (about $700mn) of transactions.

Corporate – Earnings week ahead

Ahead of Thursday’s earnings report, Morgan Stanley ended the week down 0.35% after announcing it would be buying Eaton Vance – one of the country’s oldest investment management firms – for a deal worth about $7bn. Last week, the bank purchased online brokerage ETrade for $13 bn.


08:00 PM GMT NZ House prices. Electronic Card Retail Sales at 9:45.
11:00 PM GMT UK BRC Like-4-like retail sales. Unemployment at 6 AM GMT (+1).
ND China Trade Balance


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