News / Analysis
Finance Update – The Reddening of EquitiesOctober 27, 2020
The UN yesterday pronounced a 49% drop YoY in global foreign direct investments for the first half of this year, according to Reuters.
And now, with most European nations closing down for Covid 2.0, indices were led off a cliff yesterday by the DAX’s 3.71% drop. Least affected – Switzerland’s SMI with a 0.38% loss.
The Euro is up a tad after Germany reported a 1-point increase in October’s business climate – this despite falling business climate and expectations.
With Justice Amy Barrett sworn in, US equities also had a bad day yesterday, the DOW losing 2.29% and the Russel-2000 another 2.21%. Chief amongst concerns is a post-election end to cheap money that has so far inflated markets – whether through Democratic policy or Republican bankruptcy.
The Dallas Fed yesterday upped its manufacturing index for October by 7 points to 19.8 while Chicago reported a 0.27 point activity index for the month before.
And the WTO yesterday approved the EU’s levying of $4 bn worth of tariffs on US goods in retaliation for illegal subsidies to Boeing.
Asian benchmarks followed the rest of the world red-ward excepting the Shenzhen Composite, which managed to add 0.64% throughout the session.
The yuan curtailed its rise temporarily yesterday after a Reuters poll revealed the Chinese economy would grow by a 44-year low of 2.1% before rebounding sharply in 2021.
The NZD is up slightly this morning after New Zealand’s September trade surplus expanded to $1.71 bn YoY – this despite a monthly $1 bn deficit.
Oil yesterday bounced off a 3-week low at 38.25 yesterday after Mexican Gulf rigs were shut down in anticipation of Hurricane Zeta – the 27th storm of the season, so far.
Rolls Royce yesterday lost 7.22% after announcing factory cuts and employee benefit reductions, according to the Financial Times, and plans to ask shareholders for a £2 bn influx.
HSBC closed down 0.64% for the session before surprising to the upside this morning with a 35% drop in quarterly profits and an 11% drop in revenues to $11 bn. EPS halved to 16c per share. Germany’s SAP also lost 18% after announcing a 4% drop in revenue and an 18% drop in profits.
Meanwhile, Hasbro added 6% after announcing an earnings surprise 20c per share to the upside and at $1.88 – 4c up from last year. And Santander remained level after producing a 9.6% YoY drop in revenues to €11.09 bn.
Today’s calendar includes earnings from Raytheon, Eli Lilly, Caterpillar, 3M, Nokia, Invesco, Pfizer, Oneok and akamai.
|09:00 AM GMT||EU||Bank Lending Survey|
|12:30 PM GMT||US||Durable Goods. Housing prices at 1 PM and consumer confidence at 2.|
|08:30 PM GMT||OIL||API Weekly Crude Oil Inventories|
|00:30 AM GMT (+1)`||Australia||CPIs|