News / Analysis
Finance Update – Tensions Rising – Markets DivingOctober 28, 2020
Bitcoin continues steady at 13.7K after JPMorgan (-1.89%) yesterday invited banks and fintech companies to join its new blockchain network – Link, a fork of Ethereum – that aims to connect banks in a peer-to-peer network to facilitate cross-border payments and other activities, thus undercutting the SWIFT system.
Oil yesterday peaked at $39.82 before losing the day’s gains on the API’s reported 4.55mB inventory increase at the national repository in Cushing Oklahoma. Reuters yesterday revealed that Saudi Arabia and Russia are set to extend their production cuts – this ahead of the November OPEC+ meeting in which the two were expected to announce an output increase.
Ahead of next week’s elections, Consumer confidence is allegedly dropping in swing states – a boon for the contender, Reuters reports.
Yesterday, stocks continued declining, the DOW shedding another 0.8% but the Nasdaq gaining 0.64%.
The USD is up 0.14% after relatively pleasing data yesterday, including a 1.9% increase in September durable goods orders and a 1.5% and 5.2% increase in housing prices as reported by the Federal Housing Finance Agency and S&P’s Case-Shiller report, respectively. The Richmond Fed reported an 8-point uptick in manufacturing, but Redbook Research related a 1.2% increase in its same-store sales growth index YoY for October 23 – less than half the previous reading.
European indices had another difficult day – the CAC40 losing 1.77%.
With Brexit talks reconvening in London yesterday, the Euro lost 0.28% overnight after the EU published a slight uptick in private loans. Providing a tad of backwind, Germany this morning reported a 0.3% increase in import prices MoM.
The pound is down 0.1% after this morning’s BRC report revealed another 1.2% contraction YoY in September shop prices – albeit a slower rate of descent than the month before.
Asian indices overnight shrugged off COVID led global indices, the Shenzhen composite adding 1.03% and the Hang Seng 0.05%. Ahead of tomorrow morning’s interest rate decision, the Nikkei lost 0.21% overnight as the Yen added 0.22% on safe-haven demand.
The AUD also added a ¼% as Q3 consumer inflation soared from a 1.9% contraction to a healthy 1.6% increase QoQ. Meanwhile, Reuters reports that domestic air-fuel demand in China has returned to pre-pandemic levels – yet another indication of “first in – first out”.
Amazon (+2.47%) head Jeff Bezos has hinted that he may purchase CNN after its current owner, WarnerMedia, which purchased the network in 2019, said it was planning a huge reduction in staff. Bezos already owns the Washington Post – a strong advocate of the current US presidential contender.
With its cloud activities and Teams software pushing from behind, Microsoft (+1.51%) yesterday reported a 12% increase in revenues YoY to $37.2 bn with EPS up 38% to $1.82.
DeutscheBank (-1.62%) reported this morning a €182 mn profit this past quarter – up from last year’s €942 mn loss. Revenues are up 13% YoY to €5.94 bn. Raytheon (-7%) earnings dove 54% to 58c per share on a 34% drop in sales to $14.7 bn. And, Caterpillar (-3.24%) reported a 23% decline YoY in sales to $9.9 bn, with EPS dropping 54% to $1.34.
On the med front, Pfizer (-1.29%) beat estimates with a 4% drop in revenues to $12.13 bn but a 2.86% increase in EPS to 72c. And Eli Lilly (-6.92%) disappointed with a 5% increase in revenues to $5.74 bn but a 4c drop YoY in earnings to $1.33 per share.
Today’s earnings calendar includes reports from eBay, Ford, Santander, Anthem, Beiersdorf, Western Digital, Carlsberg, Heineken, Avalon-Bay, Masco, Yandex, Telefonica, and GlaxoSmithKline. Marvell and Comcast will be paying dividends.
Finally, Facebook (+2.23%) head Mark Zuckerberg – ahead of his antitrust testimony to Congress – said the government should increase regulation of the high-tech sector. And Visa’s (-1.59%) planned $5.3bn acquisition of fintech startup Plaid is facing antitrust scrutiny, according to the Wall Street Journal.
|09:00 AM GMT||Switzerland||ZEW Expectations Index|
|11:00 AM GMT||US||MBA Mortgage Applications. Wholesale Inventories & Goods Trade Balance at 12:30|
|02:00 PM GMT||Canada||BoC Interest Rates & policy|
|02:30 PM GMT||OIL||EIA Crude Oil Stocks|
|11:50 PM GMT||Japan||Retail Trade. BoJ Interest Rates & Policy at 3 AM (+1) and Consumer Confidence at 5.|
|00:30 AM GMT (+1)||Australia||Business Confidence, Import & Export Prices|