News / Analysis
Finance Update – The Administrative ShiftNovember 24, 2020
Chinese indices continued down yesterday, the Nikkei adding 2.5% and the Hang Seng, 0.1% after HK CEO Carrie Lam announced that the Coronavirus has generated a $40 deficit.
The AUD added 0.4% despite Australia’s trade balance dropping once again to $4.84 mn in October. Reuters reports that investments in commodity projects have increased for the first time in 7 years, shrugging off COVID lockdowns and China’s trade-war backlashes.
And the Yen dropped 1 pip on BoJ Kuroda’s proclamation that Japan is not headed towards deflation with the optimistic remark that he expects capital expenditure to rebound once the Corona pandemic eases.
Major European benchmarks closed in the red yesterday, led by the Danish OMXC25’s 0.86% drop. The Dax and CAC40 lost 0.7% and the FTSE, 0.28%.
The Euro and pound added about 0.1% overnight after yesterday’s manufacturing PMIs dropped about a point each, maintaining expansionary levels and exceeding expectations. In the UK, the index shows a 1.-point increase to 55.2. Service PMIs for the zone deepened their entrenchment in contractionary territory, only maintaining a better-than-expected 45.8 in the UK, while France’s sector plunged to 38 – a tad better than expected.
Last night, BoE Gov Bailey said that a no-deal Brexit would cost the economy at least 1% in inflation – a worse hit than the COVID lockdown. The Times yesterday reported that the EU and UK are close to finalising a trade agreement, but that the Irish backstop, fishing rights and financial regulation will remain open issues.
Finally, this morning saw Germany’s Q3 GDP increasing at a better-than-expected 8.5% QoQ, pushing the yearly figure up to -4%.
The dollar index yesterday jumped 65c on Joe Biden’s announcement that former FED head Janet Yellen would be his treasury secretary, then returned half-way.
Chicago Fed head Evans told reporters that he does not expect inflation to hit the 2% target before 2022 nor the FED to raise interest rates before 2023.
As the Trump administration finally authorises the President-Elect’s team to launch the presidential transition, US indices yesterday ended up, led by the Russell’s 1.89% rise. The NASDAQ, least impressed, gained a mere 0.22%.
November PMIs improved markedly – manufacturing up 3 points to 56.7 and services 1 point to 57.7, while Chicago’s national activity index shot up to 0.83 for October.
Oil continues its 10-day uptrend, hitting 3-month highs at $43.62 this morning, after Goldman Sachs yesterday expressed concerns for the upcoming OPEC+ meeting, indicating the group’s possible inability to enforce a hoped-for extension of production cuts.
BlackRock shares spiked 1.8% yesterday on the announcement of their planned $1.05 bn acquisition of the Aperio Group before returning 0.3% of those gains.
Novartis (-0.4%) is planning a $2 bn buyback, according to Reuters, which also reports that a group of US legislators from both sides of the aisle are planning to file an antitrust lawsuit against Google as early as next month. Google shares dropped 1.6% on the announcement, then regained most losses to end down 1/2 a per cent for the session.
Earnings reports will be in today from the Compass Group, Best Buy and Hormel Foods, while Fastenal will pay dividends and JPMorgan will hold a shareholders meeting.
|09:00 AM GMT||Germany||Business climate & expectations|
|01:55 PM GMT||US||Redbook Index. Housing prices at 2, Richmond manufacturing index & consumer confidence at 3|
|08:00 PM GMT||NZ||Financial Stability Report|
|09:30 PM GMT||OIL||API Crude Oil Inventories|