Notes/Observations
- Markets awaiting developments in U.S.-China trade negotiations as well as Brexit updates
- EU meeting on possible Brexit extension on Friday unlikely to resolve issue as it now waits until UK parliament votes Monday on whether to hold an election in Dec
- German Ifo business climate unchanged in Oct suggesting some stabilization
- ECB Survey revealed further downward revisions to growth and inflation expectations for the 2019-21 period
Asia:
- China said to ask US to remove tariffs for agricultural purchases
- Japan Meti Min Sugawara to resign amid allegations of gift scandal (lawmaker Hiroshi Kajiyama to be appointed as METI Min)
Brexit:
- UK Govt to table motion for general election for Dec 12th
- EU27 envoys said not expected to make a final decision on the length of Brexit delay at Friday’s meeting (Oct 25th)
- UK Labour Party leader Corbyn (opposition) stated he would wait to see what the EU decided on a Brexit delay before deciding which way to vote on Monday
- UK Treasury reportedly would not be delivering the budget on Nov 6th since govt was calling for an election (Reminder: Javid (Fin Min) stated that was on track to present budget Nov 6th as planned. Only a no-deal brexit outcome would prevent a budget on Nov 6th)
Americas:
- VP Pence: if China ended its unfair trade, US was ready for a new future; US was not seeking to contain China’s development. Did not seek confrontation with China, sought a level playing field, open markets, fair trade and a respect for ‘our values’. We are inspired by Hong Kong protesters and we stand by them; urged people of Hong Kong to stay on a path of non-violent protest
SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM
Equities
- Indices [Stoxx600 -0.26% at 396.30, FTSE -0.34% at 7,303.15, DAX -0.14% at 12,853.70, CAC-40 -0.03% at 5,682.85, IBEX-35 +0.22% at 9,412.00, FTSE MIB +0.04% at 22,537.50, SMI +0.19% at 10,126.00, S&P 500 Futures +0.09%]
- Market Focal Points/Key Themes: European Indices trade mixed, Cable continues to come off highs as PM Johnson is said continue calls of a General Election on Dec 12th. Asian Indices were mixed, while US Indices trade little changed. On the corporate front shares of Michelin trade higher on strong Q3 Sales and affirmed outlook; Kering trades over 8% higher on strong growth especially from its Gucci unit; Valeo rises on a Revenue beat, WPP gains on a return to growth, while Barclays rises to a multi month high on strong Q3 numbers, with strength seen in its Capital markets business. Other notable gainers include Electrolux, LafargeHolcim, KPN, GEA Group and Guerbet. AB Inbev is a notable decliner, down almost 10% on a profit warning; Capgemini also falls sharply as the company cut its outlook due to the economic environment, while Ubisoft falls over 20% after slashing its full year outlook. Other notable decliners include Wartsila, Washtec, MTU Aero, Synthomer and Signify. In other news Drillisch and United Internet decline as Drillisch lowered its outlook as the company expects to incur additional costs of €85M related to price increase by Telefonica Deutschland; Tele Columbus gains as Rocket Internet discloses >12% stake. In the US Internet retail giant Amazon reported a profit miss and guided lower than forecasts, shares trade over 5% lower; Intel gains on a top and bottom line beat, while Visa is little changed on an earnings beat. Looking ahead notable earners include Verizon, Aon, Goodyear and Philips 66 among others.
Equities
- Consumer discretionary: AB InBev [ABI.BE] -10% (earnings; cuts outlook), Ubisoft [UBI.FR] -21% (cuts outlook), United Internet [UTDI.DE] -18% (unit guidance), Kering [KER.FR] +8% (sales)
- Energy: Eni [ENI.IT] -1% (earnings)
- Financials: Barclays [BARC.UK] +2% (earnings)
- Industrials: Renault [RNO.FR] -0.5% (earnings), Electrolux [ELUXB.SE] +5% (earnings), Signify [LIGHT.NL] -4.5% (earnings)
- Technology: WPP [WPP.UK] +6.5% (earnings), Tele Columbus [TC1.DE] +14% (stake)
- Materials: LafargeHolcim [LHN.CH] +2.5% (earnings)
Speakers
- ECB Wunsch (Belgium): News had been more negative since the Sept announcement of stimulus measures. Might have to consider an escape clause from guidance. Needed to pay attention to side effects of policy; believes ECB was quite far from reversal rate (**Refered to point where costs exceeded the benefits in negative rates)
- ECB and PBoC extend bilateral currency swap agreement for another 3 years
- Chancellor of the Exchequer Javid (Fin Min):stated that the govt has done everything possible to leave EU on Oct 31st; he believed that a 3-month extension was the most likely outcome. He added that the Gov could take the no deal Brexit outcome off the table
- Norway Central Bank (Norges) Gov Olsen reiterated its forward guidance that would likely keep Deposit Rate unchanged in coming periods
- Sweden Central Bank (Riksbank) Dep Gov Ohlsson reiterated view that both global and domestic global growth were slowing down. Did not see the domestic economy slipping into a deep decline
- Czech Central Bank’s Holub (chief economist): Considering rate hike at Nov policy meeting; new Staff Forecasts to be key in making decision
- China Vice Premier Hu stated that China was willing to increase agricultural and industrial goods imports from Brazil
Currencies/Fixed Income
- GBP price volatility could pick up if UK lawmakers back PM Johnson’s call for a general election on Dec. 12th. GBP/USD little changed in the session at 1.2850 area
- EUR/USD slightly higher at 1.1120 area with dealers noting the German Oct IFO survey hinted at possible stabilization in the local economy. ECB survey on growth and inflation revealed further downward revisions to the outlook and justifying the recent ECB stimulus measures that were announced in Sept.
Economic Data
- (JP) Japan Sept Final Machine Tool Orders Y/Y: -35.5% v -35.5% prelim
- (DE) Germany Nov GfK Consumer Confidence: 9.6 v 9.8e
- (FR) France Sept PPI M/M: 0.1% v 0.0% prior; Y/Y: -1.0% v -0.6% prior
- (ES) Spain Sept PPI M/M: +0.1% v -1.6% prior; Y/Y: -3.3% v -2.6% prior
- (TR) Turkey Oct Real Sector Confidence (Seasonally Adj): 104.2 v 99.7 prior; Real Sector Confidence NSA (unadj): 100.9 v 98.8 prior
- (TR) Turkey Oct Capacity Utilization: 76.4% v 76.3% prior
- (AT) Austria Industrial Production M/M: %-2.3 v -0.1% prior; Y/Y: -0.4% v +1.8% prior
- (SE) Sweden Oct Consumer Confidence: 92.7 v 90.1 prior; Manufacturing Confidence: 96.0 v 97.3 prior; Economic Tendency Survey: 93.6 v 94.4 prior
- (SE) Sweden Sept Household Lending Y/Y: 4.8% v 4.9% prior
- (SE) Sweden Sept Retail Sales M/M: 0.3% v 0.5%e; Y/Y: 2.6% v 2.4%e
- (SE) Sweden Sept PPI M/M: 0.0% v -0.5% prior; Y/Y: 0.3% v 1.4% prior
- (CN) Weekly Shanghai copper inventories (SHFE): 143.0K v 152.5K tons prior
- (RU) Russia Narrow Money Supply w/e Oct 18th (RUB): 10.69T v 10.64T prior
- (DE) Germany Oct IFO Business Climate: 94.6 v 94.5e; Current Assessment: 97.8 v 98.0e; Expectations Survey: 91.5 v 91.0e
Fixed Income Issuance
- (IT) Italy Debt Agency (Tesoro) sold total €3.0B vs. €2.5-3.0B indicated range in Zero Coupon Jun 2021 CTZ Bonds; Avg Yield: -0.112% v -0.236% prior; Bid-to-cover: 1.47x v 1.99x prior
Looking Ahead
- 05:30 (PL) Poland to sell Bonds
- 06:00 (FR) France Q3 Total Jobseekers: No est v 3.377M prior
- 06:00 (UK) DMO to sell €B in 1-month, 3-month and 6-month bills (£0.5B, £2.5B and £3.0B respectively)
- 06:30 (RU) Russia Central Bank (CBR) Interest Rate Decision: Expected to leave Key 1-Week Interest Rate unchanged at 7.00%
- 07:00 (MX) Mexico Aug Retail Sales M/M: -0.1%e v 0.0% prior; Y/Y: 2.0%e v 2.1% prior
- 07:30 (IN) India Weekly Forex Reserve
- 08:00 (UK) Daily Baltic Dry Bulk Index
- 08:00 (IN) India announces upcoming bill issuance (held on Wed)
- 08:00 (ES) Spain Debt Agency (Tesoro) announcement on upcoming issuance
- 09:30 (BR) Brazil Sept Total Outstanding Loans (BRL): 3.350Te v 3.326T prior; M/M: 0.7%e v 1.1% prior; Personal Loan Default Rate: No est v 4.9% prior
- 10:00 (US) Oct Final University of Michigan Confidence: 96.0e v 96.0 prelim
- 11:00 (EU) Potential sovereign ratings after European close (Moody’s on France, Hungary and Saudi Arabia sovereign ratings; S&P on UK, Italy and Greece sovereign ratings; Fitch on Netherlands sovereign rating; Canadian rating agency DBRS on France, Norway and Sweden sovereign rating
- 13:00 (US) Weekly Baker Hughes Rig Count
- 14:00 (US) Sept Monthly Budget Statement: $83.0Be v $119.1B prior
