Daily Briefing – Wednesday, October 25, 2017
FANG stocks in the US fell for their 5th consecutive day, as indexes ended in the green, primarily thanks to the US Senate’s overthrowing of a new regulation that would have enabled class-action suits against big banks and credit card companies for unfair business practices – the DOW up 0.7% on Caterpillar and 3M earnings, and the Nasdaq 0.18%. All this happens as former head of HSBC’s forex trading department, Mark Johnson was found guilty of misusing client information to up the bank’s profits to the tune of $3.5 billion. Markit PMIs yesterday were up, services exceeding expectations at 55.9 and manufacturing likewise at 54.5.His colleague, Stuart Scott, is fighting extradition in the UK. HSBC was fined $175mn in October for failing to supervise its forex business, only escaping money laundering charges by paying the Justice Department $1.9bn.
The European economy may end its best year in a decade, with manufacturing up by a surprising half point to 58.6, according to Markit PMIs yesterday. Services disappointed down to 54.9 and the composite also down to 55.9 for October. German figures reflected the trend, but French results were all green. Meanwhile, in Italy, shares of bailed out Monte Dei Paschi bank opened lower than the bailout price after a 10-month suspension in trading.
China’s Securities Regulatory Commission has instructed loss-making companies to delay publishing quarterly results until after the Communist Party Congress, which concluded last night with President Xi Jingping granted an additional term. The Australian dollar lost 0.9% overnight after interest rate hikes were thwarted by bad inflation readings – the Q3 CPI falling from 1.9% to 1.8% YoY. And Hong Kong and Singapore this morning announced they would link up their respective financial trading platforms using blockchain technology, this to reduce dependency on paper-based financial trading.
In what seems to be an attempt to bypass sanctions against Iran and Russia, China has announced it will roll out its yuan-dominated “PetroYuan” within 2 months- this after former World Bank Chief Economist Justin Yifu Lin admitted that replacing the US dollar with a single global currency would promote global financial stability. Oil overnight added a dollar a barrel after the API published its weekly inventories report, showing a half million barrel build but a 5.7mB draw of petrol.
After 3M’s stocks jumped 1.6% on quarterly earnings, AT&T hit expectations, and Fiat Chrysler showed profits soaring 50% yesterday, today’s reports come from Lloyds of London, which this morning reported pretax profits doubling to £1.95 and paying 1.9 pence earnings on the share, Coca Cola, which is divesting of its US bottling operations and expects to report 49c on the share, with revenues of $8,72bn – the latter down nearly $2bn from last year’s figure, and Visa, which is expected to pay 86 cents EPS on $4.63bn revenues.
|8:30 AM GMT||UK: GDP|
|11 AM GMT||Mortgages followed by Durable Goods at 12:30, and Home Sales at 2.|
|2 PM GMT||Canada: Interest Rates|
|2:30 PM GMT||EIA Crude Oil Inventories|
|9:45 PM GMT||New Zealand: Trade Balance|
|11:50 PM GMT||Japan: Foreign Investments|