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Daily Briefing – Thursday, October 19, 2017


Amidst fears that Catalonia will declare independence as a direct result of Spain’s central government’s cancelling the region’s autonomy, the Euro was strengthening this morning on a lack of harsher headlines from the Iberian Peninsula (or, in fact, ANY hard data from the Eurozone in general). Yesterday, indexes ended green on a weaker currency – especially the export-heavy FTSE and DAX. Bank of England Gov. Mark Carney yesterday told Parliament that Europe’s financial sector is more susceptible than Britain’s to a no-deal “hard” Brexit. Among the issues at stake – banking and financial services, data protection and transfer. Yesterday’s data shows a 0.1% increase in earnings but a rise in benefits claimants.



Chinese benchmarks were alone amongst Asian indexes to end the session once again in the red, and the Yuan slipped 150 pips to the USD early this morning after China’s GDP fell to 6.8% YoY in Q3. Retail sales exceeded expectations at 10.3%, as did industrial production at 6.6%; and for the first time in 2 years, the country’s housing sales value decreased by 2.4% YoY after banks increased mortgage rates and down payment scrutiny was strengthened. In Japan, the Yen too suffered a 0.11% loss as export growth fell 4% to 14.1% and imports to 12%. The data nevertheless marks the 10th straight month of trade gains, thanks to foreign demand in semiconductors. The merchandise trade surplus soared to ¥670.2B. And the AUD is up 0.22% thanks to another minor drop in unemployment – now 5.5%



The Fed’s beige book report last night showed an impressive increase in economic activity for September-October, but only modest growth in employment. In a change of tone, however, the FED is now stating that it still intends to raise interest rates in December – now not DESPITE a lack of inflation, but rather to STAVE OFF a possible SPIKE in inflation… In other data, the US housing market suffered a 4.5% contraction in building permits and 4.7% contraction in housing starts, a budget resolution enabling a simple majority vote to approve tax reform comes before the house later today, and the Nasdaq and Singapore SGX exchange initiate a dual listing arrangement.



Once again, oil remains relatively passive to an EIA report of 5.7 million barrels withdrawn from national repositories. Still, at 52.21, WTI is at a 3-week high, as tensions escalate between Iraq and its northern Kurds. Gold is down for the 3rd session in arrow, as the USD strengthens on hopes of a more hawkish FED head succeeding Janet Yellen in February.



German software solutions company SAP yesterday reported a 4% increase YoY in quarterly revenues to 5.59 Euros and a 35% increase in profits. eBay stocks plunged 4.2% following the company’s quarterly earnings report despite beating expectations with a 48 cent EPS on $514mn net income. And aluminum provider Alcoa beat revenue expectations but missed earnings by 2 cents a share. Today, PayPal reports after the close of New York markets. Expected EPS is 32 cents, up from last years Q3 of 29 cents, on revenue growth of 20% to $2.4 bn, as the company’s client base grows by 10% to 220 million thanks to an increase in demand for online payment.


Today’s Events

8:30 AM GMT UK: Retail Sales
12:30 PM GMT US: Jobless Claims & Philadelphia Fed Manufacturing Survey, followed at 6 by the FMS’ Monthly Budget Statement.

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