News / Analysis
Finance Update – Selloff taking off?September 22, 2020
Asian equities followed Europe and the US down, mostly, the Kospi losing 2.3%. The Shenzhen and Nikkei were the odd man out with 0.14 and 0.18% respectively, while ocean-bound, the NZ DJ added 1.12% as the nation emerges from COVID 2.0 almost unscathed.
With little to no concrete data anywhere yesterday, the Yen was the only major currency to enjoy the day’s equities wrath, adding a quarter per cent overnight. The Yuan’s 3-month uptrend relaxed overnight.
The AUD remains level after Australia’s central bank Dep. Gov. Guy Debelle told parliament that the bank’s board was considering market intervention and negative rates to target deflation and unemployment.
US indices followed futures down yesterday, the DOW losing 1.84% and the Nasdaq 0.13%. This morning finds futures undecided, for now as fears of new lockdowns in Europe and the lack of a Congressional stimulus bill quashes markets.
Fed Head Jerome Powell said yesterday ahead of today’s testimony before the House Committee on Financial Services that employment and economic activity continue well below pre-COVID levels and expects the government to take up policy actions to improve the situation.
The Chicago Fed delivered a disappointing 0.79 point activity index for August, while in Canada housing prices pleasingly increased by 0.5% MoM – a tick up from July.
European markets had a bloody Monday, the DAX losing 4.37% with other majors close behind. The Euro continues flat after ECB Pres. Christine Lagarde warned that the economic COVID recovery was “uncertain, uneven, and incomplete.”
DeutscheBank, on the other hand, issued a report yesterday claiming that economic recovery has been faster than expected, EC VP Valdis Dombrovskis warned yesterday that a no-deal Brexit was not inconceivable unless a trade deal is reached by year’s end, resulting in a WTO regime being set in place.
And amidst renewed allegations of bank misbehaviour (see below), the ECB yesterday published a proposal for an eased reporting regime for banks.
Gold added a 1/3% overnight as investors abandoned equities throughout the day, while gold continues to suffer renewed lockdowns, losing $2 a barrel throughout the day.
Bank shares continue down following yesterday’s revelations about the transfers of over $2 tn-worth of laundered money to safehavens in the past decade. HSBC was down 5.26%, JP Morgan -3.09%, and DeutscheBank -8.76%.
The UK’s FCA said it was launching new probes into the matter, originally exposed by BuzzFeed. Microsoft is up 1.07% after announcing a planned $7.5 bn acquisition of video games producer ZeniMax to up its ante agai9nst Sony’s new PlayStation.
Meanwhile, following yesterday’s conflicting announcements from ByteDance and Oracle regarding their post-TikTok sales shared ownership structures, China’s Global Times overnight reported that Beijing is unlikely to approve the deal due to the presence of only one Chinese national on the new board plus the presence of a US-approved “national Security Director” for the company.
Today, expect earnings reports from UK retailer Kingfisher and the US’s Autozone car parts chain, dividends from United Health and Blackrock Investments, and a shareholders meeting for Tesla.
|10:00 AM GMT||UK||CBI Industrial Trends|
|12:55 PM GMT||US||Redbook Index. Existing Home Sales & Richmond Fed Manufacturing Index at 2 PM , and the Fed’s Powell at 2:30.|
|08:30 PM GMT||OIL||API Weekly Crude Oil Inventories|
|11:00 PM GMT||Australia||Combank PMIs. Retail Sales at 1:30 AM (+1).|
|00:30 AM GMT (+1)||Japan||Jibun Manufacturing PMI. Industry Activity Index at 4:30 & Kuroda speaks at 5:35 AM|
|02:00 AM GMT (+1)||NZ||RBNZ Interest Rate & statement|