Queensway Blog

News / Analysis

Finance Update – The Administrative Shift


Asia – Australia ups commodities investments

Chinese indices continued down yesterday, the Nikkei adding 2.5% and the Hang Seng, 0.1% after HK CEO Carrie Lam announced that the Coronavirus has generated a $40 deficit.

The AUD added 0.4% despite Australia’s trade balance dropping once again to $4.84 mn in October. Reuters reports that investments in commodity projects have increased for the first time in 7 years, shrugging off COVID lockdowns and China’s trade-war backlashes.

And the Yen dropped 1 pip on BoJ Kuroda’s proclamation that Japan is not headed towards deflation with the optimistic remark that he expects capital expenditure to rebound once the Corona pandemic eases.

Europe – Brexit close to signing

Major European benchmarks closed in the red yesterday, led by the Danish OMXC25’s 0.86% drop. The Dax and CAC40 lost 0.7% and the FTSE, 0.28%.

The Euro and pound added about 0.1% overnight after yesterday’s manufacturing PMIs dropped about a point each, maintaining expansionary levels and exceeding expectations. In the UK, the index shows a 1.-point increase to 55.2. Service PMIs for the zone deepened their entrenchment in contractionary territory, only maintaining a better-than-expected 45.8 in the UK, while France’s sector plunged to 38 – a tad better than expected.

Last night, BoE Gov Bailey said that a no-deal Brexit would cost the economy at least 1% in inflation – a worse hit than the COVID lockdown. The Times yesterday reported that the EU and UK are close to finalising a trade agreement, but that the Irish backstop, fishing rights and financial regulation will remain open issues.

Finally, this morning saw Germany’s Q3 GDP increasing at a better-than-expected 8.5% QoQ, pushing the yearly figure up to -4%.

Americas – Trump admin admits Biden team

The dollar index yesterday jumped 65c on Joe Biden’s announcement that former FED head Janet Yellen would be his treasury secretary, then returned half-way.

Chicago Fed head Evans told reporters that he does not expect inflation to hit the 2% target before 2022 nor the FED to raise interest rates before 2023.

As the Trump administration finally authorises the President-Elect’s team to launch the presidential transition, US indices yesterday ended up, led by the Russell’s 1.89% rise. The NASDAQ, least impressed, gained a mere 0.22%.

November PMIs improved markedly – manufacturing up 3 points to 56.7 and services 1 point to 57.7, while Chicago’s national activity index shot up to 0.83 for October.

Commodities – Goldman: OPEC+ is weak

Oil continues its 10-day uptrend, hitting 3-month highs at $43.62 this morning, after Goldman Sachs yesterday expressed concerns for the upcoming OPEC+ meeting, indicating the group’s possible inability to enforce a hoped-for extension of production cuts.

Corporate – Another Google trust claim launched

BlackRock shares spiked 1.8% yesterday on the announcement of their planned $1.05 bn acquisition of the Aperio Group before returning 0.3% of those gains.

Novartis (-0.4%) is planning a $2 bn buyback, according to Reuters, which also reports that a group of US legislators from both sides of the aisle are planning to file an antitrust lawsuit against Google as early as next month. Google shares dropped 1.6% on the announcement, then regained most losses to end down 1/2 a per cent for the session.

Earnings reports will be in today from the Compass Group, Best Buy and Hormel Foods, while Fastenal will pay dividends and JPMorgan will hold a shareholders meeting.


09:00 AM GMT Germany Business climate & expectations
01:55 PM GMT US Redbook Index. Housing prices at 2, Richmond manufacturing index & consumer confidence at 3
08:00 PM GMT NZ Financial Stability Report
09:30 PM GMT OIL API Crude Oil Inventories


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