Notes/Observations
- UK lawmakers rejected Brexit legislative timetable, putting October 31 exit in doubt; awaiting to see if EU formally offers the UK another extension
Asia:
- China govt said to be considering plans to replace Hong Kong Leader Lam with interim Chief Executive. Successor could be installed by March and serve for the remainder of Lam’s term (until end of 2022). Officials said to aim to make change when situation stabilized to not appear to be appeasing protests
Brexit:
- UK Parliament passed the 2nd reading of Brexit bill (as expected) with the vote being 329 to 299 (Needed 320 to pass)
- UK Parliament rejected the “Program Motion” for an accelerated Brexit bill (vote was 308-322)
- PM Johnson stated that would “pause” legislation on Brexit as Govt official spoke to EU about their intentions; Reiterated stance that would accelerate plans for a ‘no deal’ Brexit (one report speculated that PM Johnson might be open to a 10 day delay of the Oct 31st Brexit deadline in order to work through the amendment process).
- PM Johnson spokesperson: not ruling out seeking a short Brexit delay and clarified that Brexit legislation was paused, not pulled
- UK Govt official stated that a Brexit delay until Jan 31st would mean the only way to move forward would be an election
- EU’s Tusk was said to have recommend that EU accept UK’s Brexit extension request to avoid no-deal outcome
- France govt: Brexit deal must be implemented without delay; France was open to a ‘technical’ Brexit extension
Americas:
- Brazil Senate passed the main text of pension bill by 60 to 19, had not voted on amendments. Politicians and businesses will now shift focus to tax reform
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.22% at 393.74, DAX +0.02% at 12,756.88, FTSE +0.32% at 7,235.35, CAC-40 -0.44% at 5,632.90, IBEX-35 -0.28% at 9,354.00, FTSE MIB -0.50% at 22,375.50, SMI -0.02% at 10,015.50, S&P 500 Futures -0.08%]
- Market Focal Points/Key Themes: European Indices trade mostly lower after a mixed session in Asia and slightly lower US Index futures. The UK FTSE outperforms as Cable weakens on the back of a rejected Brexit legislative timetable putting the Brexit on Oct 31st in doubt. On the corporate shares of PSA group trades over 2% higher in France as the Automaker reported a slight Revenue beat; ABB trades over 3% higher as profit came ahead of consensus, while Revenue was broadly in line, French supermarket giant Carrefour also gains on in line Q3 results and affirmed outlook, with Akzo Nobel another notable gainer despite missing on earnings, but announced a share buyback which has supported shares. Meanwhile Heineken declines as Organic sales came in line but guidance was tweaked to the lower end; Nokian Renkaat declines on a profit warning, while Swedbank declines ~5% on a fall in profits. In other news Nordex declines on an analyst downgrade, with Schmolz + Bickenbach decline on a trading update and capital raise. Looking ahead notable earners include General Dynamics, Blackstone, Caterpillar, Anthem, Hilton Worldwide, Eli Lily and dow component Boeing among others.
Equities
- Consumer discretionary: Heineken [HEIA.NL] -3% (volumes report)
- Energy: Nordex [NDX1.DE] -1% (analyst action), Norsk Hydro [NHY.NO] +5% (earnings), Neste Oil [NESTE.FI] +6% (earnings)
- Financials: Swedbank [SWEDA.SE] -5% (earnings), Intrum [IJ.SE] +5.5% (earnings)
- Industrials: PSA [UG.FR] +2% (earnings), ABB [ABBN.CH] +3% (earnings), Antofagasta [ANTO.UK] +1% (production), SSAB [SSABA.SE] +2% (earnings)
- Technology: Infineon [IFX.DE] -2.5% (US rival earnings & guidance)
- Telecom: Telenor [TEL.NO] -1% (earnings)
Speakers
- ECB Supervisory Board chief Enria: EU needed to give investors more clarity on bank capital
- German Cabinet confirmed nomination of Schnabel for ECB position
- Russia Energy Min Novak: No official proposal from OPEC+ members to change current production cut agreement but always possible to tweak agreement. Reiterated stance that all OPEC+ members needed to fully comply with production cuts and not aware of discussions of deeper cuts at the Dec meeting
- Japan Foreign Min Motegi: New Japan car tariffs not in upcoming trade talks with US
- Hong Kong Security Secretary John Lee Ka-chiu formally withdraws the extradition bill in legislature (**Reminder: On Sept 4th Hong Kong Chief Executive Lam formally withdrew the extradition bill)
- China Foreign Ministry Spokeswoman Hua Chunying: firmly backed Hong Kong’s Chief Lam (refuted earlier press reports that China govt was considering plans to replace Hong Kong Leader)
- China Commerce Ministry (MOFCOM) was said to adopt new policy to increase trade development. To roll out specific measures to boost “high-quality trade development” and strengthen contingency plans to “actively” address trade dispute with the US. China pledged to actively increase imports while keeping foreign trade stable with better quality
- China Premier Li reiterated stance that cooperation between China and US would enable a healthy growth in bilateral relations on the basis of mutual respect and equality
Currencies/Fixed Income
- FX Price action in Europe was quite subdued despite the Brexit saga continuing. The UK parliament rejection of an accelerated legislative timeline derailed the hopes of a Oct 31st exit from the EU. The GBP was softer as the Common’s vote set up the risk of a snap election to break the impasse or even a 2nd referendum on the issue. GBP/USD was testing the 1.2850 area just ahead of the mid-session. EU Leaders planned to discuss the UK situation today and decide whether to offer another extension so the legislative process could be wrapped up.
- Risk appetite was on a more cautious footing with the typical safe-haven currencies benefiting. USD/JPY fell to a one-week low at 108.25 and the Swiss franc gained after British lawmakers forced a delay in the UK government’s Brexit plans
Economic Data
- (DK) Denmark Oct Consumer Confidence Indicator: 1.7 v 4.3 prior
- (FR) France Oct Business Confidence: 105 v 106e; Manufacturing Confidence: 99 v 102e; Production Outlook Indicator: -1 v +5e; Own-Company Production Outlook: 4 v 5e
- (FR) France Oct Overall Business Overall Demand Survey: -1 v -2 prior
- (TR) Turkey Oct Consumer Confidence: 57.0 v 55.8 prior
- (ZA) South Africa Sept CPI M/M: 0.3% v 0.4%e; Y/Y: 4.1% v 4.3%e
- (ZA) South Africa Sept CPI Core M/M: 0.2% v 0.4%e; Y/Y: 4.0% v 4.2%e
- (TW) Taiwan Sept Industrial Production Y/Y: -0.8% v +0.9%e
- (PL) Poland Sept Unemployment Rate: 5.1% v 5.1% e
- (RO) Romania Sept M3 Money Supply Y/Y: 9.3% v 8.5% prior
- (IS) Iceland Sept Wage Index M/M: 0.5% v 0.0% prior; Y/Y: 4.2% v 4.3% prior
Fixed Income Issuance
- (DK) Denmark sold total DKK2.56B in 2022 and 2029 bonds
- (IN) India sold total INR160B v INR160B indicated in 3-month, 6-month and 12-month bills
- (SE) Sweden sold total SEK1.5B vs. SEK1.5B indicated in 2028 and 2039 Bonds
Looking Ahead
- 05:30 (DE) Germany to sell €3.0B in 0.00% Aug 2029 Bunds
- 05:30 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
- 06:45 (US) Daily Libor Fixing
- 07:00 (US) MBA Mortgage Applications w/e Oct 18th: No est v 0.5% prior
- 07:00 (UK) Parliament weekly PM Q&A in Commons
- 07:00 (RU) Russia to sell OFZ bonds
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:30 (CA) Canada Aug Wholesale Trade Sales M/M: No est v 1.7% prior
- 09:00 (US) Aug FHFA House Price Index M/M: 0.3%ev 0.4% prior
- 10:00 (EU) Euro Zone Oct Advance Consumer Confidence: -6.8e v -6.5 prior
- 10:30 (US) Weekly DOE Oil Inventories
- 12:00 (CA) Canada to sell 3 Year Bonds
- 13:00 (US) Treasury to sell 2-Year FRNs Reopening
- 13:00 (US) Treasury to sell 5-Year Notes
- 15:00 (AR) Argentina Aug Shop Center Sales Y/Y: No est v -9.8% prior; Supermarket Sales Y/Y: No est v -12.7% prior
- (CO) Colombia Sept Industrial Confidence: No est v 10.5 prior; Retail Confidence: No est v 29.1 prior
- 17:00 (CL) Chile Central Bank (BCCh) Interest Rate Decision: Expected to cut Overnight Rate Target by 25bps to 1.75%
