The Daily Market Updates – 30th October 2015
Bank of Japan
Overnight the BOJ left their monetary policy unchanged, which was widely expected by market analysts. Any outside chance of an increase in asset purchasing were dashed when members of the policy board voted 8 to 1 to keep policy consistent, with the only dissenter surprisingly voting to reduce quantitative easing.
The official ‘Purchasing Managers Index’ will be released this Sunday in China. It will analyse the manufacturing activity in the world’s second largest economy by revealing if conditions have either improved, remained the same or diminished.
Asian markets are on course for their best month in more than 6 years. Fuelled by ‘hopes’ that Central Banks will inject more stimulus into struggling economies, bourses across Asia are rebounding after 4 straight months of losses. China’s Shanghai Composite recorded a 10.8% gain in October, with many analysts now feeling that markets have already priced in the potential benefits of further easing.
The Daily Market Updates – 29th October 2015
The Fed kept up the ongoing ‘Will they, won’t they?’ interest rate saga by unexpectedly announcing that interest rates could rise at their next meeting, and they followed this up by dropping some key rhetoric in their press statement. The markets perceived this as being very hawkish, with the Fed funds rate now pricing in a 47% chance of a December rate hike. The main rate was held at 0.25% as expected, with only one member voting for a hike, but the major news come from the Feds decision not to mention concerns of the global economy.
The Reserve Bank of New Zealand, which has cut rates three times consecutively since June, remained unchanged in their latest policy meeting. The Central Banks governor said it will adopt a “wait and see” approach.
The recent US Crude Oil Inventories suggest that recent over supply issues may have stabilised. Crude oil markets have reacted positively to this, even seeing the hawkish statement from the FED as bullish for oil, with the risk of falling US demand subsiding.
Debt Limit passed by the House
The US House of Representatives passed a two year budget deal that prevents the US from reaching its debt limit. The measure will now be sent to the Senate later this week.
The Daily Market Updates – 28th October 2015
Volkswagen posted a €3.48 Billion third quarter loss and issued a full year profit warning in their earnings report today. Analysts were expecting a loss of €1.6billion to cover the recent emissions scandal which has sent shockwaves through the automobile industry. Despite the results, Volkswagen’s share price has climbed today as Chief Executive Officer Matthias Mueller said the company has the strength to overcome the scandal.
IBM have become the main focus of the Security Exchange Commission (SEC) who have recently announced an investigation into the US tech company. The probe will focus revenue generated on some deals from the US, UK and Ireland.
Australia release disappointing CPI data overnight, showing a reading of 2.1% vs 2.4% which is a 3 year low.
The Daily Market Updates – 23rd October 2015
US heavyweights Alphabet (Google), Amazon and Microsoft all reported strong earnings last night, and equity index markets reacted accordingly. Google saw a beat with a 3rd Qtr. earnings per share (EPS) of $7.35 versus acity forecast of $7.21, Microsoft quarterly adjusted EPS came in at $0.67, which was above estimates of $0.58 and finally Amazon saw a solid $0.17 EPS.
The main interest rate and QE program remained unchanged in yesterday’s announcement, but all the action happened at the subsequent press conference. News wires lit up with red headlines as Draghi comfortably announced that their monetary policy will be re-examined in December, the strongest hint that the QE program may be stepped up, and a possible further cut to its already negative deposit rate. The announcement sent the Euro in to free fall and gave equity markets a huge lift. Yields on bonds declined as bond prices rose with the Italian and Spanish 2- year bond briefly printing below zero, meaning a sub-zero return for investors holding those bonds.
The ECB press conference and positive results from US conglomerates supported Asian equities helping the Nikkei to outperform, with the Japanese Yen softening.
PMI Manufacturing and Services
The ‘Purchasing Mangers’ Index was released this morning for the Eurozone and all focus was on the individual larger economies. France were up first with their manufacturing coming in at 50.7 (a number above 50 shows the sector is growing), this was better than estimates of 50.2. The French Service Industry also beat expectations, recording a number of 52.3. European powerhouse Germany showed mixed results with their important manufacturing industry beating estimates, but still showing a 5 month low at 51.6, and the service sector beating expectations at 55.2.
The Daily Market Updates – 22nd October 2015
Company Earnings Results
More disappointment yesterday in the financial sector, with American Express reporting a miss on both earnings per a share and revenue. Elsewhere eBay saw a beat on analyst forecasts, reporting a third quarter EPS of $0.43, against estimates of $0.40.
Ferrari began their first full day on the market yesterday, trading as high as $61 a share at one point. That was 17% above the $52 per share price of the initial public offering, which raised $893 million for the luxury Italian sports car maker.
Citi-bank released a downbeat assessment of the global economy yesterday, and sees all major central banks either continuing to hold off rates rises or implement further easing. They see an increase in QE by the ECB, PBoC, BOJ and RBA while predicting that the FED and BOE will hold on ‘lift off’.
The Department of Energy US crude oil change week on week saw another build in its report last night. City oil experts estimates of 3.5m barrels were trumped by an actual reading of 8m barrels. The build was more than double the forecasts and oil prices briefly extended their losses.
UK retail sales saw a dramatic increase in the third quarter, volume surged by 1.9 percent against economist’s’ forecasts for a 0.3 percent rise. The period recorded is slightly distorted as it does include the Bank Holiday at the end of August, which the September 2014 figures did not include.
Today the European Central Bank reports the outcome from its latest policy setting meeting. No rate change expected from the city’s leading analysts and, although they do expect a change in QE at some point, but it’s unlikely we will see that today.
The Daily Market Updates – 21st October 2015
The American multinational technology company released their earnings last night, revealing a $1.16billion increase in revenue, which disappointed investors who were expecting $1.3billion. CEO Marissa Mayer said that spinning off Yahoo’s stake in Alibaba was now Yahoo’s top priority.
Global Dairy Trade
The GDT average price has fallen for the first time since August, softening the New Zealand Dollar. This adds further pressure to the currency, which is also pricing in the recent downgrade of Fonterra.
Overnight the Nikkei 225 outperformed, when compared to other bourses, following disappointing trade data figures. The release will further stoke calls for further easing.
Shares in the Italian luxury car maker are set to make their debut today, with demand from investors pushing the initial price up to top end of expectations.
The Daily Market Updates – 20th October 2015
The 2nd largest component of the DJIA, making up 5.8% of the index, reported a miss on their earnings yesterday after the bell. The earnings per a share came in at $3.02 against estimates of $3.30. The global technology and consulting corporation have cut future forecasts in wake of the poor earnings. As well as IBM, we have seen Goldman Sachs and Wallmart report poor earnings. These 3 companies alone make up 15% of DJIA.
With the ECB due to begin their monthly rate setting meeting tomorrow, it is not just traders who will be anxiously waiting on any news of further easing. The Swiss National Bank, who have battled strength in the Swiss Franc over a number of years, will be on guard to take action against any further appreciation. Swiss policy makers have labelled the Franc ‘overvalued’ and its currently trading near a 7 week high against the euro.
The Daily Market Updates – 19th October 2015
Asian stocks have made little ground on the recent GDP release from China overnight. The economy grew by 6.9%, beating forecasts of 6.8%. Retails sales also marginally beat expectations, coming in at 10.9% against expectations of 10.8%. Industrial production did miss though with a print of 5.7%, with analysts forecasting a rise of 6%. Goldman Sachs were quick to comment that the PBoC “has beaten the yuan bears”, and now they have room to cut rates.
Japanese Finance Minister
Taro Aso dampened the prospect of further increase in the BOJ asset buying policy on Friday, citing a surplus of cash in the Japanese economy and a weak domestic demand.
Policymaker Ewald Nowotny said in a recent interview that it may be a little too early to talk about a QE extension. He went on to say that the ECB needs to keep calm and show it is in control of inflation, but governments may still have to loosen fiscal policies in order to boost growth.
Switzerland’s anti-immigration party, the SVP, won 29.5 per cent of votes in the national elections making them the biggest party. The recent refugee crisis has overshadowed the elections in which the SVP have clearly capitalised.
The Daily Market Updates – 16th October 2015
The investment bank giant released their earning yesterday and for the first time in 7 years the figures disappointed. The released showed that Goldman’s earnings per a share came in at $2.64, with analysts hoping for around $3.08. Godman Sachs make up 7% of the Dow Jones Industrial Average, which declined on the announcement. Elsewhere Citi Group’s results were a little brighter, with the EPS coming in at $1.31 beating forecasts of $1.28.
From the US yesterday we saw the Consumer Price Index report released with traders looking for further signs of when interest rates may be raised. The headline rate came out in line with analyst expectations at -.20% M/M. Excluding the volatile food and energy prices there was a slight beat on forecasts with the figure coming in at 0.20% vs 0.10%. The weekly initial jobless claims saw their lowest level since 1973, recording a figure of 255k vs estimates of 270k. Despite this positive claims number, disappointing US retail sales numbers from Wednesday and yesterday’s weak earnings have pushed back rate hike expectations to April 2016.
The Shanghai Composite finished off the week strong, with a 6.5% rise. Posting its best weekly performance since early June.
The US Department of Energy reported their crude inventory change yesterday and markets were expecting a build in stock of around 2.5m barrels, instead we got a figure of 7.5m which was a huge surprise. This figure adds further downside to the outlook of oil which has seen a fall recently.
The Daily Market Updates – 15th October 2015
Asian equities shrugged off a lacklustre Wall Street close to finish higher. Stocks experienced strong buying as fresh signs of reform boosted Chinese state-owned firms. The strong finish also comes after a weak Industrial Production Report from Japan, with the final figure showing a contraction of 1.2%. Elsewhere, we saw Australia release their jobs report and, although the employment rate came out in line with analyst forecasts at 6.2%, the Employment Change was a surprising miss, with jobs falling by 5.1k after forecasts of a 9.6k rise. The Australian Dollar lost ground as no analyst predicted a fall, but we have now recouped those losses.
The streaming giant reported lower than expected earnings yesterday with the US based service managing to only add 880k subscribers verses its own forecast of 1.15 million. The shortfall is being put down to a blip in processing payments with the recent change to chip and pin cards.
The Daily Market Updates – 14th October 2015
Raise The Debt Ceiling
The debt ceiling comes back into focus now, with reports that the US treasury will run out of cash by the 10th November. Remarkably, all the extraordinary measures which have been in placed now since the statutory debt limit was hit 7 months ago are now completely exhausted. The consequences of going over the ‘cliff’ is unknown as this situation is unprecedented. If the ceiling is not extended then the government would soon fail to make interest payments on its debt and any missed payments would trigger a default. This could cause financial markets to sink, and surely the world’s biggest economy will slip into recession.
JP Morgan reported after the bell yesterday and they missed forecasts with revenue falling as much as 7%. The bank says it is pursuing a path which will shrink the overall size of the bank which means it will avoid new capital surcharges imposed by the Federal Reserve on larger banks. Intel have also reported their 3rd quarter earnings, beating expectations… however, profits fell by 6.3% on continued weakness in demand for personal computers.
Markets have fallen overnight as inflation data from the world’s second biggest economy disappointed expectations. The consumer price index recorded a rise of 1.6%, but that missed expectations of 1.8%. This softer CPI reading showed that prices slowed for the first time in 4 months.
The New Zealand dollar was the notable underperformer overnight as the Reserve Bank of New Zealand Governor Wheeler suggested that additional easing is likely.
OPEC technical meeting to be held on 21st October, non-members Brazil, Russia, Norway among invitees.
This morning we saw the International Labour Organisation (ILO) release their jobs report on the UK. It showed the unemployment rate was at 5.4%, with the survey estimating 5.5%, and the prior being 5.5%, UK Jobless Claims Change for September came in at 4.6k, again with the survey being -2.2k, and the prior being +1.2k. Finally, the UK Average Earnings actual figure was +3.0%, versus a survey of +3.1%, and a prior of +2.9%. For June to August 2015, 73.6% of people aged from 16 to 64 were in work, the highest employment rate since comparable records began in 1971.
The Daily Market Updates – 12th October 2015
Over the weekend we saw a number of ECB officials speak, with President Mario Draghi urging Greece to stick to its bailout commitments, while Deutsche Bundesbank President Jens Weidmann warned us about the risks of employing an “ultra-loose” monetary policy.
The International Monetary fund have warned the global economy that a potential third storm is brewing. This year’s annual meeting was held in Lima, Peru, and there was a series of stark warnings from central bankers who say that the biggest threat to the global economy could be a potential mass default on debt from emerging markets.
The Shanghai Composite continued to extend gains overnight following comments from PBoC Deputy Governor Yi, proclaiming that a stock market fluctuations are over.
US Columbus Holiday
Bond markets are closed, but stock markets remain open. Traders should expect thin volume throughout the day.
Overnight we have seen continued strengthening in the Australian Dollar as well as with commodities, these moves are being seen as a response to the Fed hike rate being delayed due to uncertainty in the global economy.
The Daily Market Updates – 9th October 2015
Last night the FOMC minutes were released for the September policy meeting in Washington, which showed that many members feel that conditions to hike interest rates will be met later this year. There was a general consensus that inflation will remain below 2% in the near term, which appears to be the main stumbling block for raising interest rates. The overall tone of the minutes release was more dovish than expected, as it revealed that the FED had concerns regarding the economy even before Non-Farm payrolls last week. The Federal Funds Rate future, which is used to estimate the markets view of the probability of a rate change by the Federal Reserve, shows that March 2016 as the likeliest month when rates will be hiked.
Overnight the Asian markets continued to rally. The move has been attributed to the dovish US Fed minutes which have ignited hopes that rates will stay lower for longer. Stocks are on course to record their biggest weekly rally since 2012.
Yesterday saw the release of the minutes from the ECB’s September meeting. The general tone from the report showed that ECB members saw a greater risk of lower inflation in September. Policy-makers also warned of uncertain economic outlook due to the economic slowdown in China. According to the ECB Chief Economist Peter Praet, there are ‘Challenges facing the emerging market economies which were clouding the global outlook, and are unlikely to recede quickly’.
The Governor of the Bank of England spoke yesterday after the central bank kept rates and QE targets unchanged. He said that he was ‘concerned in the global economy about a big build up in debts.’ He also went on to say that the ‘Fed hike timing is not decisive for UK’ and ‘China is important but also not decisive’.
Prices for the key oil benchmark, West Texas Intermediate, rose to $50 today surpassing previous 3 month highs. The move high has been underpinned by recent news that OPEC and Non-OPEC members have agreed a meeting to discuss the recent rise in oil supplies. The meeting will take place on the 21st October.
The Daily Market Updates – 8th October 2015
Overnight we saw the re-opening of the Shanghai Composite, fresh from its Golden Week holiday. The index finished up 3.8% as it played catch up with the general bullish theme seen this week. The Australian ASX recorded a small rise, but was relatively muted as oil prices cooled.
The German bank have warned shareholders that it will take a €6.5B charge on assets in both its investment bank and retail/private banking operations for the 3rd quarter. The bank have said that write downs were sparked by tougher regulatory requirements. At the market open shares slid by 3%, but have since gained ground.
German Trade Balance and German Exports
Today we have seen more poor data coming out of Germany, with exports reporting a slide not seen since the height of the 2009 recession. German trade balance also narrowed as exporters grapple with a slowdown in China and other emerging markets, which are a key destination for exports. The decline is the latest sign the economy is deteriorating and may weigh on the Euro.
Today sees a whole host of central bank releases and speeches from key members. First we start with the BoE rate announcement where their views are expected to remain unchanged in both their key interest rate and their asset purchase program. The vote is forecasted to show a 8-1 vote for unchanged rates, with Ian McCafferty expected to be the dissenter. Analysts have been reporting that there is an outside chance that Martin Weale and Kristin Forbes may join the McCafferty camp. After the midday release we see the ECB release their minutes from the latest policy meeting. Not too much focus is being attributed to this, but may have significant market impact if there is any inclination that the ECB are ready to step up their bond purchases. Later this evening we all see the US FED release their minutes from the latest FOMC meeting. Not too many surprises are forecasted as FED Chair Janet Yellen did participate in a press conference after the recent meeting as per usual, so no new information is likely.
The Daily Market Updates – 7th October 2015
Bank Of Japan
The BoJ held their regular policy meeting in the early hours of this morning and there was no change in the interest rate but, more importantly, the rate of asset purchasing was kept unchanged. A number of analysts had said that there was a scope for change in the BOJ’s quantitative easing policy, but this failed to materialise. The Japanese Yen initially strengthened, shaking out disappointed speculative players. Traders and analysts may see this move as temporary with many feeling that policy change is inevitable and focus will now move onto the October 30th policy meeting.
Following on from the BOJ announcement, Asian markets have traded mostly higher, underpinned by rise in energy prices as sentiment gathers momentum.
German Industrial Production
Today saw another disappointing piece of data from Germany, with Industrial Production in August dropped by 1.2% M/M, previously we had seen a rise of 1.2%. Many traders will be asking if these pieces of weak data are signs that the German economy is failing to gain momentum.
First half profits slumped by 55% after challenging market conditions, which adds further woe to the UKs supermarket giant. Like for like sales, the key metric figure, fell 1.1%… but this was better than expected. Tesco have employed rigorous price cuts and store closes which seem to be paying off. The share price had seen some positive gains pre-figure release and this seems to be continuing, breaking through resistance seen since 27th August.
The Daily Market Updates – 6th October 2015
Reserve Bank of Australia
The RBA kept their cash rate unchanged at 2% as expected, and maintained a neutral bias which subsequently saw AUD/USD reclaim the $0.7100 level. Analysts still think that the Australian economy needs a bit more help from a lower Aussie dollar, but a rate cut may appear unlikely which does suggest the recent China slowdown has been overblown. However, there is still plenty for the RBA to do in the upcoming months in order to boost domestic growth.
Markets rallied Tuesday as risk appetite grows following expectations that the US Federal Reserve will delay hiking key interest rates. Shares in Japan rose the most on bets that its central bank may further loosen monetary policy at its meeting.
Bank of Japan
The BOJ holds their regular policy meeting which begins this evening. The rate is expected on Wednesday morning around 3:30GMT. International news wires Bloomberg have given 4 reasons disputing why the BOJ will not change their current asset purchasing program. They feel that more purchasing pushes up living costs faster than wages, job applicants are at their highest, the Yen seems stable at 120 vs the USD, and the Japanese benchmark yield is the lowest amongst the G7 nations. Goldman Sachs, on the other hand, have said that market participants should be on guard for a potential policy change.
German Factory Orders
Industrial orders have fallen for a second month running. The European powerhouse seems to be feeling the hit from the current global slowdown. This report was conducted before the Volkswagen scandal and this will no doubt heavily influence on the next report.
A historic trade agreement by the US, Japan and 10 other countries has been seen as a positive move by analysts. The TPP agreement is expected to open agricultural markets in Japan and Canada as well tighten rules. The pact is seen as a move to compete with China and its growing dominance in the region.
The US treasury sold a government security with a three month maturity that pays a 0% yield for the first time on record. The demand for the paper has pushed down the yield meaning investors will not get any profit on a 3 month bond.
The Daily Market Updates – 5th October 2015
After a week of turmoil, the Anglo-Swiss commodity trading and mining company bolstered the FTSE 100 this morning, putting the index on track for its 4th day of gains. Shares are up over 20%, following on from a 72% rise in shares listed in Hong Kong. The move higher has been attributed to take over talks but company executives were quick to confirm that they are “unaware of any reasons for these price and volume movements”.
Today’s UK services PMI (Services make up 78.4% of GDP by sector) come in at 53.3 (est. 56.0). This soft patch is the weakest quarter for UK services since 2013. Even though the value is above 50.0, which signals an expansion, the sector did not expand as rapidly as forecasted which adds fuel to the fire that growth may be rounding off. The main positive from the report is the strongest rise in employment in 3 months.
Europe Equity Markets Open Higher
Following on from the Asian markets positive move over night, the European stocks have ‘gapped’ higher than their Friday close. Traders and analysts feel the move higher is down to expectations that Beijing will take steps to accelerate growth, as well as the increase in sentiment that the US Fed will hold off any policy action due to the recent poor jobs report.
The UK government will offer cut price shares in Lloyds banking group more than 8 years after the financial crisis. About £2 billion worth of shares will be offered next spring.
The Daily Market Updates – 2nd October 2015
A relatively subdued end to the week. Asian markets traded with no real direction overnight, even as they anticipate today’s important monthly jobs report from the US.
Today’s Non-Farm Payroll, which is released at 13:30 (BST) does not seem to have as much emphasis as last month’s report. This is likely due to the estimation of a potential rate hike falling to 16% for October, which is about half of what was expected for September. Analysts are forecasting an increase in the headline figure of around 200,000 new jobs created, following on from 173,000 created last month. The Unemployment Rate is expected to hold steady at 5.1%. A significant improvement on the headline figure could change investors views on a October rate hike.
The Daily Market Updates – 1st October 2015
Concerns regarding China’s slow down have eased for the time being. China’s manufacturing data for September was largely steady from the previous month. This has had a positive impact in Asia, with the Nikkei closing up 1.9%, and the ASX 200 ending the day positive 1.8%. The Chinese and Hong Kong markets were closed yesterday, and will continue to be until October 7th due to the Golden Week holiday. China’s official Manufacturing Purchasing Index rose to 49.8 from 49.7. The Japanese Yen weakened overnight in line with the improvement in risk sentiment – the currency has recently been seen as a safe haven asset by traders.
Manufacturing data from Europe has largely been seen as mixed. The UK slightly beat forecasts while Germany missed estimates, but still saw its best quarter of the year. France was the most positive after the 50.6 print shows that the manufacturing economy has returned to expansion.
Glencore rose another 7% in today’s market open, erasing all losses seen this week. This comes after a meeting between officials and investors who sought to reassure credit investors that its financing was strong after a market rout earlier this week.