Danske Research Team
Danske Bank A/S
Market Movers
In the UK the first estimate of Q3 GDP growth is released. Based on the key economic figures for Q3 released so far (we only have 44% of all information), we estimate GDP growth slowed to 0.5% q/q in Q3 from 0.7% q/q in Q2. If right, this would, however, still be at trend growth.
Euro area money supply figures for September are also due for release and we expect a further improvement to 5.0% y/y. This should follow as the bank lending survey released last week showed a continued increase in demand for loans. For enterprises, the increase in demand for loans was due mainly to the general level of interest rates, as well as to increased needs for fixed investments. Late in the evening (CET) ECB’s Coeure speaks in Mexico City.
In the US, Real US capital goods orders ex aircraft and defence showed a significant increase in Q3 after a very weak run over the prior three quarters. August data showed a moderation in growth and September durable goods order data will show whether this was a one-off or if order growth is coming down further in response to global weakness. Also in the US, October data for the Conference Board’s measure of consumer confidence will give us valuable input about the strength of the labour market with the gauge on ‘jobs plentiful’ and ‘jobs hard to get’. The preliminary Markit PMIs and the S&P Case Shiller House price index will also attract attention.
Selected Market News
Global risk sentiment has lost steam after the ECB and People Bank of China (PBoC) induced rally over the previous two sessions. Markets have gone into wait-and-see mode ahead of the upcoming central bank meetings with not least FOMC tomorrow and Bank of Japan on Friday. Sentiment in Asia overnight has also been influenced by Chinese industrial profit figures revealing a y/y and YTD y/y decline of 0.1% and 1.7%, respectively.
Commodities prices remain under pressure. While base metals and oil initially rallied on PBoC’s announcement on Friday of additional easing, markets soon questioned the motivation behind further stimulus amid speculations of the validity of last week’s Chinese GDP figures. Brent crude has shredded almost 2% in the last 24 hours, also aided by renewed US stockpile concerns.
New home sales in the US surprised significantly to the downside yesterday, dropping 11.5% y/y and bringing the pace back to 2014 levels. The release was at odds with a series of recent data that suggested that the housing market remains solid. Importantly, the new home sales release is notoriously volatile.
In New Zealand trade balance figures revealed a wider-than-expected trade deficit. The decline was especially due to disappointing export figures but imports also surprised to the upside. The NZD weakened on the release.
The US Navy has tested Chinese territorial claims as a US destroyer has sailed through two artificial islands in the South China Sea.
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