News / Analysis
Finance Update – Fed AheadSeptember 16, 2020
Asian indices are mixed this morning, 1.2% off the Shenzhen as the ASX gains a per cent. The nation’s Westpac leading index shows an impressive 0.48% increase but new home sales in August contracted by 14.4% MoM.
Both the Yen and Nikkei are slightly up as a new Prime Minister takes his seat and August’s Merchandise Trade Surplus shoots up to ¥248.3 bn.
And in China, the Yuan continues north after China approves $13 bn worth of investments in infrastructure projects.
The Euro is down despite an excellent 10-point increase in economic sentiment for September – 73.9 rather than the expected drop to 62.8 throughout the EU and a 6 point increase in Germany to 77.4.
Indices yesterday were up led by the FTSE’s 1.32% rise on Parliament’s endorsement of PM Johnson’s plan to renounce signed Brexit agreements with the EU. The DAX leads the rear with a 0.18% rise.
This morning’s UK data shows retail prices contracting by 0.3% after July’s 0.5% increase, Producer Inflation increasing by a worse-than-expected 5.8% but the CPI contracting less than expected to 0.9% in August. Yesterday’s unemployment rise has increased pressure on finance minister Rishi Sunak to extend the job subsidy programme expected to expire in October.
On the Brexit front, Britain has offered concessions on the fisheries dispute easing restrictions on EU boats in the Channel Islands and a more gradual phasing out of fishing quotas. The EU, for its part, is extending the 18-month window for Euro derivatives clearing in London. Meanwhile, a bullish wedge is forming on the GBP as opposition to Johnson’s Brexit bridge-burning grows within his own party.
US indices continue up led by the Nasdaq’s recovery to the tune of 1.21% while the WTO rules against the US for imposing tariffs on $200 bn-worth of Chinese imports.
The USD continues to form a bearish wedge as Bloomberg reports Morgan Stanley’s warning that the Congressional failure to deliver a new round of fiscal stimulus would set the economic recovery back 6 months. The Fed this evening is expected to provide somewhat optimistic forecasts amidst assurances of continued monetary support.
Providing very little back wind was yesterday’s positive data – a 4-fold increase to 17 in September’s NY State Manufacturing index, improvements in import and export prices – albeit the former missing expectations, but a less stellar than expected 0.4% increase in August’s industrial production.
Oil added $1.90 over the day as the API reported a very welcome 9.5 mB reduction in crude inventories. This is the second day of increasing prices as US offshore production closes down ahead of Hurricane Sally’s arrival.
On the earnings front, Adobe added 2.42% after hours yesterday after announcing a 14% increase YoY in revenues to $3.23 bn as EPS soared 22% to $1.97, and FedEx shot up nearly 9% after hours upon its 14% YoY increase in revenues to $19.3 bn, bringing earnings per share to $4.72 – a 68% increase YoY.
Apple (+0.16%) will be releasing its new iOS 14 today, and DePaul University yesterday reported that Amazon (+1.71%) has increased its fleet by 50% since February last year despite a decline in air cargo traffic. The company this week announced that its Prime Day shopping campaign will take place on October 5th.
|09:00 AM GMT||EU||Trade Balance|
|11:00 AM GMT||US||Mortgage Applications. Retail Sales at 12:30 PM. Business Inventories at 2 PM and the FOMC’s projections, interest & Policy at 6.|
|12:30 PM GMT||Canada||CPIs & Foreign Investments|
|02:30 PM GMT||OIL||EIA Crude Oil Stocks Change|
|11:50 PM GMT||Japan||Foreign Investments. BoJ Interest & policy at 3 AM (+1)|
|01:30 AM GMT (+1)||Australia||Unemployment|