News / Analysis
Finance Update – Liar, liar, pants on fireSeptember 23, 2020
Despite a Thomson-Reuters/INSEAD report showing a rebound in Q3 Asian business sentiment, Asian markets are undecided this morning – Australia’s S&P up 2.21% but the Nikkei and Hang Seng down 0.37% and 0.07%, respectively. The spread applies to Chinese indices, as well.
The Yen is down 0.14% after the Jibun bank yesterday added a tick to its manufacturing PMI, bringing it to a still contractionary 47.3, while this morning’s all industry activity index is down to 1.3%.
Preliminary Retail sales for August in Australia contracted by 4.2% in August while Combank’s preliminary PMIs all expanded impressively – the composite finally into expansionary mode at 50.5 in September.
And New Zealand’s central bank is holding on to its 0.25% interest rate.
European markets closed mixed yesterday led up by the Dutch AEX’s 0.89% at one extreme, with the Portuguese PSI20 at the other with -0/87%.
The Euro continues weakly after ECB board member Yves Mersch told Bloomberg yesterday that the ECB’s inaction this month has not had any adverse effect on the Eurozone’s extremely cautious economic recovery. The EC yesterday published a better-than-expected -13.9 point preliminary consumer confidence index for September. In Germany, the same measure this morning was a worse-than-expected -1.6.
Britain’s Confederation of British Industry reported a worse than expected 48% contraction in industrial trends for September MoM. PM Johnson’s Brexit-breaking bill is expected to gain popularity after legislators voted themselves veto-power over its implementation.
And so, ahead of a possible no-deal Brexit, Moody’s yesterday reported that the world’s major financial institutions were preparing to transition from the ICE-administered London Interbank Offered Rate (LIBOR) benchmark.
The dollar continues north on the FED’s latest hawkishness. Bank head Powell and Treasury Sec Mnuchin told Congress that they had reached the legal limits of monetary policy tools and that Congress would need to finally step in. Chicago Fed head and FOMC member Charles Evans at the same time told London’s Official Monetary, and Financial Institutions Forum suggested that an interest rate increase could be in the offing.
Meanwhile, the Richmond Federal Reserve reported a 21-point manufacturing index for September. Existing home sales expanded by 2.4% MoM in August, reaching a 14-year high, and the Redbook Index showed a 1.5% increase in same-store sales YoY.
Tensions were stoked at the UN yesterday after US President Trump said China should be held accountable for having “unleashed” the Corona pandemic, Reuters reports this morning, resulting in China’s ambassador to the organisation calling the US leader a liar. US equities seemed in recovery mode last night, the Nasdaq up 1.71% and the Dow 0.52%.
Oil is down by a per cent after the API yesterday reported a 691k barrel increase in inventories. Chinese crude storage slowed for the 2nd month in a row in August, Reuters reports, as PetroChina begins processing its first batch of piped-in Russian crude.
And gold is down $17 per ounce on dollar strength.
Nike was up 3% and another 14% after hours upon its announcement of a much better than expected 1% decline in revenues ($10.61 bn) for the quarter. Diluted earnings increased 10% YoY, producing 95 cents per share.
Walmart (+0.9%) is partnering with Quest Diagnostics to deliver COVID test kits by drone. Facebook (+2.66%) has removed Chinese accounts posting US election-related content. And Amazon is expected to announce next week its October 13-14 Prime Day sales campaign.
Tesla yesterday bucked the Nasdaq trend by losing 5.6% after investors realised that Musk’s promised half-priced batteries were at least 3 years away.
Yandex, the Russian Google clone, is up 11.8% in NY after announcing its imminent purchase of the Tinkoff online bank for an estimated $5.48 bn. Later today expect dividends from Equinix, Amcor and Halliburton.
|7:15 AM – 1:45 PM GMT||France, Germany, EU, UK & US||Markit Services & Composite PMIs|
|11:00 AM GMT||US||Mortgage Applications. Housing price index at 1 PM. & Powell testifies at 2.|
|02:30 PM GMT||OIL||EIA Crude Oil Stock Change|
|10:45 PM GMT||NZ||Trade Balance|
|11:50 PM GMT||Japan||BoJ Monetary Policy meeting minutes.|