News / Analysis
Finance Update – COVID 2.0 Economically DormantSeptember 28, 2020
Asia – Chinese government to spend more
Asian indices were mixed last week, Australia’s S&P adding 1.51% and the Hang Seng losing a third.
Reuters reports that industrial profits in China grew for the 4th month in a row – 19.1% in August with the government promising additional investments in 5G technology, artificial intelligence, semiconductors and new materials development.
The Yen is down 0.19% after Thursday’s disappointing services price index, and the AUD is down 0.31% after the Australian Bureau of Statistics released a preliminary August trade surplus falling by 300mn to $4.294 bn.
Europe – BoE continues pushing negative rates
European indices were led down, mainly, by the DAX and Italy’s FTSE losing 1.1% each.
The Euro continues under pressure following improvements in German sentiment markers on Thursday that just missed expectations and a European money supply reading that shows a worse-than-expected 9.5% drop in the zone’s central bank monetary dispensation YoY.
Business and consumer confidence in Italy soared to 92 and 103.4 points, respectively in August as the nation seems to weather the 2nd corona wave better than expected.
In the UK shares added 0.34% after the CBI released an excellent 11% improvement in retail & wholesale distributive trends and a 2-point increase in consumer confidence on Thursday, helping push the pound up against the USD. Net borrowing, on the other hand, missed expectations, doubling to £35.195 bn in August.
The BoE’s Silvana Tenreyro told the Sunday Telegraph yesterday that negative interest rates could help alleviate the nation’s economic downturn, echoing similar sentiments from her colleagues last week.
Americas – NFP ahead this week
US indices closed up once again on Friday led by the Nasdaq with a 2.26% increase.
The USD continues soaring despite a disappointing 0.4% increase in durable goods orders for August and – once again – disappointing performances on the jobless claims front.
Home sales, on the other hand, pleased punters with a 4.8% increase, rather than the expected 1% contraction. And the Kansas Fed delivered an 18 point manufacturing activity index rather than the negative 11 expected.
Despite a 4-rig increase according to Friday’s Baker Hughes report, oil managed to claw its way back up above the $40 mark, where it remains despite losing nearly ½ a per cent since.
And gold bounced off support at 1854 after completing a double top the day before.
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|0:005 AM GMT||Japan||Leading Economic Index. CPIs at 11:30 PM|
|02:30 PM GMT||US||Dallas Fed Manufacturing Business Index|