HomeContributorsFundamental AnalysisUK Growth Slows To A 9 Year Low Amid Brexit Uncertainty

UK Growth Slows To A 9 Year Low Amid Brexit Uncertainty

Notes/Observations

  • UK avoids a technical session; recent data highlights the concerns of the recent BOE doves
  • Spain’s second general elections in 2019 failed to resolve the impasse and appeared to have deepened the country’s political fragmentation
  • Hong Kong violence escalates

Asia:

  • China Oct CPI beat expectations for its fastest annual pace since Jan 2012, data breached China’s inflation target (YoY: 3.8% v 3.4%e)
  • Hong Kong protester shot by police amid protests and amid ‘chaos’ during the Monday commute (Note: Protests have increased in intensity after a student died after falling from a parking garage last week)
  • China Global Times Editor-in-chief Hu Xijin: What President Trump said was not what the markets expected. But he said “the US has not agreed to a rollback of tariffs”. It’s not a flat denial. What’s certain was that if there’s no rollback of tariffs, there would be no ‘Phase 1’ deal
  • BOJ Summary of Opinions from Oct meeting: Appropriate to clarify policy stance was tilted to monetary accommodation by indicated there would be downward bias in policy

Europe/Mideast:

  • Spain Election Results: Socialists Party of acting PM Sanchez again failed to gain majority in parliament, received 120 seats out of total of 350 (-3 seats)
  • Moody’s revised UK sovereign outlook to Negative from Stable; Affirmed Aa2 rating

Americas:

  • President Trump stated that : China trade talks were coming along nicely, I’d like to make a deal with China but it had to be the right deal; also described as incorrect reports that said how much the US was ready to roll back
  • White House Economic Advisor Peter Navarro: There’s no agreement to rollback existing tariffs as part of phase 1 deal

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

  • Indices [Stoxx600 % at #, FTSE -0.57% at 7,317.45, DAX -0.29% at 13,190.01, CAC-40 +0.02% at 5,890.81, IBEX-35 -0.29% at 9,366.00, FTSE MIB -0.34% at 23,454.50, SMI +0.04% at 10,313.50, S&P 500 Futures -0.34%]
  • Market Focal Points/Key Themes: European indices trading mainly lower after lower indices in Asia and slightly lower US futures. On the corporate front, Greggs trades over 15% higher following strong Q3 trading update and raised FY PBT expectations; Dignity falls on Q3 trading update as revenues declined y/y but FY outlook was left unchanged, while other notable decliners include Informa and Finablr and Eco Animal Health which dives 35% on trading update. German traded Talanx trades slightly higher on earnings and Teamviewer also gains on earnings. In other news, Swedol jumped 38% on acquisition offer from Momentum group at SEK 46.50/shr; Just Eat (-0.5%) issued update, while Prosus declines as Just Eat says its acquisition offer for significantly undervalues the company and continues to recommend combination with Takeaway.com +1.5%. Looking ahead notable US earner Liberty Media, Compugen and Amicus Therapeutics among others.

Equities

  • Consumer discretionary: Greggs [GRG.UK] +15% (trading update), Swedol [SWOLB.SE] +38% (offer), Just Eat [JE.UK] -0.5%, Prosus [PRX.NL] -1%, Takeaway.com [T5W.DE] +1.5% (offer updates), Informa [INF.UK] -1% (trading update)
  • Financials: Talanx [TLX.DE] -1% (earnings)
  • Healthcare: Eco Animal Health [EAH.UK] -35% (trading update)
  • Technology: Teamviewer [TMV.DE] +7% (earnings), Finablr [FIN.UK] -5% (trading update)

Speakers

  • Russia Central Bank First Deputy Governor Yudaeva reiterated stance of room for more possible rate cuts following situation closely
  • Hong Kong Chief Exec Lam: Protesters were relentlessly destroying society; called for citizens to condemn the violence. Violent protests could lead Hong Kong to the point of no return. Reiterated that violence would not help meet demands
  • OPEC Sec Gen Barkindo: Not satisfied with compliance with production cuts
  • UAE Energy Min Al Mazrouei:Not concerned about global oil demand growth
  • Oman Oil Min: Extension of current production cut agreement is likely; sees extension of deal until end-2020 (current expiration is Mar 2020). Saw no need for deeper production cuts among the OPEC+ members

Currencies/Fixed Income

  • GBP/USD was little phase despite a rash of weaker UK economic data in the session. Q3 GDP data saw the UK avoid a technical session. Industrial Production and trade data all missed expectations and seemed to reinforce the concerns of the recent BOE doves. GBP/USD higher by 0.2% in session at 1.805
  • EUR/USD was little changed at 1.1030 area. Dealers noted that the 2nd general election in Spain this year failed to resolve the impasse and appeared to have deepened the country’s political fragmentation.
  • Unrest and escalation of violence in Hong Kong put the Far East markets on edge which provided some safe-haven flows into JPY currency. USD/JPY back below the 109 level as a result.

Economic Data

  • (DE) Germany Oct Wholesale Price Index M/M: -0.1% v -0.4% prior; Y/Y: -2.3% v -1.9% prior
  • (DK) Denmark Sept Current Account Balance: 15.1B v 16.9B prior; Trade Balance: 9.0B v 9.9B prior
  • (DK) Denmark Oct CPI M/M: 0.4% v 0.3%e; Y/Y: 0.6% v 0.5%e
  • (DK) Denmark CPI Oct EU Harmonized M/M: +0.5 v -0.3% prior; Y/Y: 0.6% v 0.4% prior
  • (NO) Norway Oct CPI M/M: 0.2% v 0.2%e; Y/Y: 1.8% v 1.8%e
  • (NO) Norway Oct CPI Underlying M/M: 0.0% v 0.2%e; Y/Y: 2.2% v 2.3%e
  • (NO) Norway Oct PPI M/M: 0.1% v 0.0% prior; Y/Y: -13.8% v -10.7% prior
  • (SE) SEB Sweden Housing-Price Indicator: 42 v 46 prior
  • (CZ) Czech Oct CPI M/M: 0.5% v 0.4%e; Y/Y: 2.7% v 2.7%e
  • (CZ) Czech Sept Export Price Index Y/Y: 0.9% v 0.4% prior; Import Price Index Y/Y: -0.7% v -1.1% prior
  • (HU) Hungary Sept Preliminary Trade Balance: €0.6B v €0.3Be
  • (CH) Swiss Weekly Total Sight Deposits (CHF): 591.5B v 591.9B prior; Domestic Sight Deposits: 504.1B v 493.8B prior
  • (IT) Italy Sept Industrial Production M/M: -0.4% v -0.4%e; Y/Y: -2.1% v -2.1% prior; Industrial Production NSA Y/Y: +1.0% v -4.7% prior
  • (CN) China Oct New Yuan Loans (CNY): 661.3B v 800Be
  • (CN) China Oct Aggregate Financing (CNY): 618.9B v 950.Be
  • (CN) China Oct M2 Money Supply Y/Y: 8.4% v 8.4%e
  • (UK) Q3 Preliminary GDP Q/Q: 0.3% v 0.4%e; Y/Y: 1.0% v 1.1%e (avoids a technical recession)
  • (UK) Sept Monthly GDP M/M: -0.1% v -0.1%e
  • (UK) Q3 Preliminary Private Consumption Q/Q: 0.4% v 0.4%e; Government Spending Q/Q: 0.3% v 0.5%e; Gross Fixed Capital Formation Q/Q: -0.2% v -0.4%e; Exports Q/Q: 5.2% v 2.9%e; Imports Q/Q: 0.8% v 2.0%e
  • (UK) Q3 Preliminary Total Business Investment Q/Q: 0.0% v -0.5%e; Y/Y: -0.6% v -1.1%e
  • (UK) Sept Index of Services M/M: 0.0% v 0.1%e; 3M/3M: 0.4% v 0.4%e
  • (UK) Sept Industrial Production M/M: -0.3% v -0.1%e; Y/Y: -1.4% v -1.2%e
  • (UK) Sept Manufacturing Production M/M: -0.4% v -0.2%e; Y/Y: -1.8% v -1.6%e
  • (UK) Sept Construction Output M/M: -0.2% v -0.5%e; Y/Y: 0.5% v 0.8%e
  • (UK) Sept Visible Trade Balance: -€12.5B v -ÂŁ10.1Be; Total Trade Balance: -ÂŁ3.4B v -ÂŁ2.0Be; Trade Balance Non EU: -ÂŁ4.0B v -ÂŁ2.5Be

Fixed Income Issuance

  • None seen

Looking Ahead

  • 05:30 (DE) Germany to sell €2.0B in 6-month BuBills
  • 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
  • 06:00 (PT) Portugal Industrial Sales, Employment Report
  • 06:00 (BR) Brazil Nov IGP-M Inflation( 1st Preview): No est v 0.7% prior
  • 06:00 (IS) Israel to sell 2022, 2023, 2029, 2030 bonds
  • 06:00 (RO) Romania to sell RON75M in 4.4% 2023 Bonds
  • 06:00 (TR) Turkey to sell 2-year bond
  • 06:25 (BR) Brazil Central Bank Weekly Economists Survey
  • 06:30 (CL) Chile Central Bank (BCCh) Oct Minutes
  • 06:45 (US) Daily Libor Fixing
  • 07:00 (MX) Mexico Sept Industrial Production M/M: No est v 0.8% prior; Y/Y: No est v -1.3% prior; Manufacturing Production Y/Y: No est v -0.5% prior
  • 07:00 (IN) India Sept Industrial Production Y/Y: -2.5%e v -1.1% prior
  • 07:00 (CZ) Czech Central Bank to comment on CPI data – 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
  • 08:00 (RU) Russia Sept Trade Balance: $14.0Be v $12.0B prior; Exports: $34.8Be v $33.8B prior; Imports: $21.0Be v $21.8B prior
  • 08:00 (UK) Daily Baltic Dry Bulk Index
  • 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming 6-month and 12-month bill auction
  • 08:15 (US) Fed’s Rosengren (hawk, dissenter) speaks in Oslo
  • 09:00 (FR) France Debt Agency (AFT) to sell combined €3.4-4.6B in 3-month, 6-month and 12-month Bills
  • 16:00 (NZ) New Zealand Oct ANZ Heavy Truckometer M/M: No est v 2.4% prior
  • 16:45 (NZ) New Zealand Sept Net Migration: No est v 3.5K prior
  • 17:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 113.5 prior
  • 18:50 (JP) Japan Oct M3 Money Stock Y/Y: No est v 2.0% prior; M2 Money Stock Y/Y: No est v 2.4% prior
  • 19:30 (AU) Australia Oct NAB Business Confidence: No est v 0 (flat) prior; Business Conditions: No est v 2 prior
  • 21:00 (NZ) New Zealand Q4 Inflation Expectation Survey: 2-year Outlook: No est v 1.86% prior
  • 22:00 (TH) Thailand Central Bank to sell combined THB70B in 3-month and 6-month
  • 22:30 (HK) Hong Kong to sell 3-month and 6-month
  • 22:35 (JP) Japan to sell 30-Year JGB Bonds
  • 23:30 (TW) Taiwan to sell TWD40B in 2-year Certificates of Deposits (NCD)
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