News / Analysis
Finance Update – India Takes the FifthFebruary 24, 2020
The IMF yesterday announced that India has overtaken France and the UK to become the world’s fifth-largest economy according to nominal GDP ($2.94 bn, discounting inflation).
Real GDP, however, is in a 3-year downtrend due to personal consumption, investments, and exports. In the past few years, growth has slowed from 9% in 2003-11 to 4.5% in 2018; credit downgrades, social marginalization, political divisiveness, and an alarming increase in the suicide rate are just a few of the indications that the nation is in turmoil.
Meanwhile, in New Zealand, retail sales grew by 0.7% in 2019’s 4th quarter, compared to 1.7% the quarter before, while credit card spending failed to hit the expected 5.1%, coming in at 3.7% in January.
The NZD has lost 40 pips over the weekend, this while existing home sales contracted by 1.3% – better than the expected 1.8. Asian markets are opening the week in the red, led by Australia’s ASX (-2.25%) The Shenzhen Composite is the odd man out, with a 1.27% improvement, after most regions in China slowly return to normal activities with many provinces reporting zero new coronavirus cases. Toyota this morning announced the reopening of its Chengdu plant.
European markets closed down last week, led by Italy’s FTSE, which lost 1.22%. CPIs on Friday showed no improvement over December last year, but PMIs improved for manufacturing, which were up a point to a 12-month high but still in contractionary territory.
Services were up 3 ticks to 52.8. German manufacturing was up to 47.8, while France declined, as did industrial sales in Italy. The UK also showed a 2-point increase in manufacturing. February’s preliminary PMI, now at 51.9, is at a 10-month high.
Services were down to 53.3, as the Confederation of British Industry warned PM Johnson not to ignore the nation’s services sector (read: banks) from a post-Brexit EU deal. Reuter reports a poll expressing concern that such a deal would focus on goods only.
US markets also closed in the red, led by the Nasdaq’s 1.79% contraction. This morning’s futures bode bad, all 3 major markers opening with considerable bear gaps.
Market yesterday handed in a manufacturing PMI for February that’s down a point to 50.8. The dollar index lost 40 cents before regaining most of the loss over the weekend. North of the border, the CAD lost 40 pips after retail sales came in flat on Friday, despite expectations for a 0.1% increase.
Oil futures are down 2% this morning – a 2-week record drop – after Baker Hughes announced another one-rig increase in the weekly count despite corona-related demand concerns.
Gold opened this morning with a $10 bull gap, shooting up to 1685 before settling at 1665, as it continues its uptrend on global health.
Bitcoin is having trouble regaining its 10k foothold, as both Fidelity International and Morgan Stanley invest heavily in crypto enterprises. CoinDesk, this morning, reports that bitcoin’s historical volatility over this past month has been lower than WTI crude – 42% versus 119.6%.
Morgan Stanley has announced it will purchase online broker Etrade for $13bn, hoping to capitalize on its young clientele and its $56bn deposit base. And Shopify has announced it was joining Facebook’s Libra Association, this after major companies left the consortium, pressured by US officials.
|9 AM GMT||Germany||IFO Business Climate & Expectations|
|9:30 AM GMT||UK||Mortgage Approvals|
|3:50 PM GMT||US||Dallas Fed Manufacturing Index|
|11:50 PM GMT||Japan||Corporate Services Price Index. Coincident & Leading Economic Indexes at 5 AM (+1)|