Daily Briefing – Monday, September 25, 2017
The Euro opened Asian trading overnight with yet another bear gap after Germany’s right wing AfD party soared in Sunday’s election. The currency remains strong, however, after Friday’s PMIs all exceeded expectations, placing manufacturing at a 7-year high. In London, following the PM’s anticlimactic speech on Friday, Moody’s downgraded the UK from Aa1 to Aa2 based on a weak outlook on public finances and economic growth – 1% in 2018 down from 1.5% this current year. The Pound crashed and recovered.
US indexes remain skeptical of the FOMC’s hawkish announcements last week. Plans on Pres. Trump’s latest tax plan have been leaked and show that tax rates for the rich will be cut to 35% and to corporations to 25%. PMIs on Friday were mixed, with services missing expectations. Manufacturing rising somewhat and composite down half a point – all described as “resilient” after the disruptions of last week’s hurricanes. In Canada, annual inflation missed its target, placing pressure on the Local dollar.
S&P is following Moody’s and downgrading China from AA- to A+ due to debt growing faster than income, and a month before the nation’s communist leadership congress. The Yuan fell momentarily overnight but has recovered since higher. Japan’s manufacturing PMI overnight missed expectations but is at a 4-month high nevertheless. The government’s economic report this morning reflects continued optimism, but BoJGov. Kuroda has announced a $17.8bn stimulus package for education and corporate investments. Otherwise, stock markets ignored German elections, with the Nikkei up ½% and Australian and New Zealand indexes also rising. Chinese benchmarks, including the Hang Seng, are all down this morning.
West Texas crude continues to trend above the $50 mark after Baker Hughes on Friday announced a further 5-rig reduction in active oil rigs but production continues to recover from Texas weather.
|8 AM GMT||Germany: Business Climate & Expectations|
|2 PM GMT||US: Dallas Fed Manufacturing Index|
|9:45 PM GMT||New Zealand: Trade Balance|