EU Equities And Euro Currency Higher After PMI Readings

Notes/Observations

• Tale of two PMI readings for Europe as Manufacturing stays in expansion territory while most services readings contracted (exception UK which is still expanding)
• Major EU PMI Manufacturing: Beats: Germany, Euro Zone, UK; in-line: France
• Major EU PMI Services: Beats: None; Misses: Germany, France, Euro Zone, UK
• Companies expected to report earnings during the NY morning include Autoliv, American Express, Cleveland Cliffs, Carter’s

Asia:

• Japan formally signed a post Brexit trade deal with the UK (as expected)
• Australia Oct Preliminary PMI Manufacturing registered its 5th month of expansion (54.2 v 55.4 prior
• Japan Oct Preliminary PMI Manufacturing registered its 18th straight contraction but highest reading since Feb (48.0 v 47.7 prior)
• Japan Sept National CPI Y/Y: 0.0% v 0.0%e’ CPI Ex Fresh Food (core) Y/Y: -0.3% v -0.4%e; CPI Ex Fresh Food/Energy (core-core) Y/Y: 0.0% v -0.1%e
• New Zealand Q3 CPI remained within target level for the 16th straight quarter but registered its lowest annual pace in two years (Q/Q: 0.7% v 0.9%e; Y/Y: 1.4% v 1.7%e)

Coronaviurs:

• Total global cases 41.6M (+1.1% d/d); total deaths: 1.13M (+0.5% d/d)

Europe:

• EU Brexit Negotiator Barnier stated that was very important to be back at the bargaining table and had a huge common responsibility to avoid no deal outcome
• UK Oct Preliminary GfK Consumer Confidence: -31 v -28e

Americas:

• Trump /Biden debate was a much calmer affair than the 1st round with both candidates more restrained
• Sen Maj Leader McConnell: Democrats want to spend way more on aid than is needed. Not enough time for a vote on the stimulus Bill before the election
• Pelosi, White House see progress on COVID-19 aid talks

Energy:

• Russia President Putin: Does not see need to change OPEC+ agreement yet; Russia is prepared to cut oil output further if necessary

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.54% at 362.22, FTSE +1.06% at 5,846.94, DAX +0.68% at 12,627.95, CAC-40 +1.06% at 4,902.81, IBEX-35 +0.99% at 6,864.00, FTSE MIB +0.96% at 19,260.50, SMI -0.06% at 9,993.39, S&P 500 Futures +0.12%]
• Market Focal Points/Key Themes: European indices open mixed with modest downside bias but later went on to trade mostly in the green; better performing sectors include consumer discretionary and technology; underperforming sectors include financials and industrials; McCarthy and Stone receives takeover offer; reportedly SSAB looking at merger with Tata Steel’s European unit; Airbus asked suppliers to be ready for output hike post-crisis; earnings expected in the upcoming US session include American Express, Autoliv, Greenbrier and Cleveland-Cliffs

Equities

• Consumer discretionary: McCarthy & Stone [MCS.UK] +41% (to be acquired)
• Energy: Norsk Hydro [NHY.NO] +5% (earnings)
• Financials: Barclays [BARC.UK] +6% (earnings), Econocom [ECONB.SE] -19% (sales)
• Industrials: Daimler [DAI.DE] +2% (final earnings), Renault [RNO.FR] +2% (sales), ABB [ABBN.CH] -2% (earnings)

Speakers

• France Fin Min Le Maire: Q4 GDP to show a negative number; Covid-19 curfew to cost approx €2.0B to the domestic economy
• Italy govt said to plan a potentially national curfew in a week if number of coronavirus cases rise
• Russia Energy Min Novak saw 2020 oil production at 507M tons with exports at 225M tons
• Japan Cabinet Office (Govt) Oct Monthly Economic Report maintained its overall economic assessment that the domestic economy remained in a severe situation despite signs of improvement. It raised its view on consumption while cutting its view on imports

Currencies/Fixed Income

• EUR recovered from its initial slight losses as EU Manufacturing PMI readings held up in Oct. Market participants seemed to look past the Services data. Focus did remain on the virus situation in Europe as the Euro zone recovery appeared to be at serious risk as COVID-19 cases rose. ECB meets next week (Thurs) and some speculation that ECB chief Lagarde will signal that more support is on the way.
• GBP/USD remained on firm traction over the recent optimism the Britain and the EU were edging closer to a Brexit trade agreement. Pair edging back to the 1.31 area by mid-session.

Economic Data

• (UK) Sept Retail Sales (ex-auto/fuel) M/M: 1.6% v 0.5%e; Y/Y: 6.4% v 5.0%e
• (UK) Sept Retail Sales M/M: 1.5% v 0.2%e; Y/Y: 4.7% v 3.7%e
• (NL) Netherlands Sept House Price Index M/M: 1.0% v 0.9% prior; Y/Y: 8.6% v 8.2% prior
• (AT) Austria Aug Industrial Production M/M: -0.6% v +5.6% prior; Y/Y: -3.3% v -3.7% prior
• (FR) France Oct Preliminary Manufacturing PMI: 51.0 v 51.0e (2nd month of expansion); PMI Services: 46.5 v 47.0e (2nd month of contraction); PMI Composite: 47.3 v 48.0e
• (DE) Germany Oct Preliminary Manufacturing PMI: 58.0 v 55.0e 4th straight expansion and highest reading since Apr 2018); PMI Services: 48.9 v 49.4e (1st contraction in 4 months); PMI Composite: 54.5 v 53.3e
• (SE) Sweden Sept PPI M/M: +0.4% v -0.2% prior; Y/Y: -4.2% v -4.6% prior
• (CN) Weekly Shanghai copper inventories (SHFE): 155.5K v 156.7K tons prior
• (EU) Euro Zone Oct Preliminary Manufacturing PMI: 54.4 v 53.0e (4th month of expansion and highest reading since Aug 2018); PMI Services: 46.2 v 47.0e (2nd straight contraction); PMI Composite: 49.4 v 49.2e
• (PL) Poland Sept Unemployment Rate: 6.1% v 6.1%e
• (RU) Russia Narrow Money Supply w/e Oct 16th (RUB): 13.48T v 13.41T prior
• (TW) Taiwan Sept Industrial Production Y/Y: 10.7% v 6.8%e
• (RO) Romania Sept M3 Money Supply Y/Y: 15.1% v 14.3% prior
• (TW) Taiwan Sept M2 Money Supply Y/Y: 7.2% v 6.7% prior; M1 Money Supply Y/Y: 12.1% v 11.0% prior
• (UK) Oct Preliminary Manufacturing PMI: 53.3 v 53.1e (5th straight expansion); PMI Services: 52.3 v 53.9e (4th straight expansion); PMI Composite: 52.9 v 54.0e

Fixed Income Issuance

• (IN) India sold total IN310B vs. INR310B indicated in 2022, 2025, 2030 and 2050 bonds

Looking Ahead

• 05:30 (ZA) South Africa to sell combined ZAR2.0B in I/L 2025, 2033 and 2046 Bonds
• 06:00 (UK) DMO to sell £1.75B in 1-month, 3-month and 6-month bills (£0.5B, £0.5B and £0.75B respectively)
• 06:30 (RU) Russia Central Bank (CBR) Interest Rate decision: Expected to leave Key 1-Week Auction Rate unchanged at 4.25%
• 06:45 (US) Daily Libor Fixing
• 07:00 (MX) Mexico Aug Retail Sales M/M: 3.2%e v 5.5% prior; Y/Y: -9.8%e v -12.5% prior
• 07:00 (BR) Brazil Oct FGV Consumer Confidence: No est v 83.4 prior
• 07:30 (IN) India Weekly Forex Reserve w/e Oct 16th: No est v $551.5B prior
• 07:30 (is) Iceland Exchange auction
• 08:00 (BR) Brazil Mid-Oct IBGE Inflation IPCA-15 M/M: 0.8%e v 0.5% prior; Y/Y: 3.4%e v 2.7% prior
• 08:00 (CL) Chile Sept PPI M/M: No est v 1.7% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (RU) Russia Central Bank (CBR) Gov Nabiullina post rate decision press conference
• 08:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:00 (ES) Spain Debt Agency (Tesoro) announces upcoming bond issuance (held on Thursdays)
• 08:30 (BR) Brazil Sept Current Account Balance: $3.0Be v $3.7B prior; Foreign Direct Investment (FDI): $2.0Be v $1.4B prior;
• 09:00 (BE) Belgium Oct Business Confidence: -11.5e v -10.8 prior
• 09:45 (US) Oct Preliminary Markit Manufacturing PMI: 53.5e v 53.2 prior; PMI Services: 54.6e v 54.6 prior; PMI Composite: No est v 54.3 prior
• 10:00 (UK) BOE’s Ramsden on financial stability
• 11:00 (EU) Potential sovereign ratings after European close (Moody’s on Israel and Romania Sovereign Debt to be rated; S&P on Italy, UK and Greece Sovereign Debt ; Fitch on Netherlands and Iceland Sovereign Debt; Canadian rating agency DBRS on Greece Sovereign Debt
• 13:00 (US) Weekly Baker Hughes Rig Count
• (IT) Italy Debt Agency (Tesoro) announcement on upcoming 6-month bill issuance