Beijing asks residents to avoid gathering at weekend due to rapid rise in COVID-19 cases

EU Mid-Market Update: Beijing asks residents to avoid gathering at weekend due to rapid rise in Covid cases; North Korea missile launch triggers Security Council meeting led by US VP Harris.

Notes/Observations

- UK Oct Retail Sales data mainly beats consensus but markets view its rebound as masking a bleaker outlook.

- UK equities digest Autumn budget details as banking, insurance and energy sectors take focus. Strikes continue as Heathrow ground handlers enter 3-day strikes and Royal Mail announces new 6-day strike incl Christmas Eve.

- North Korea fired another missile with speculation of it being an ICBM; Fears over nuclear capability and escalation has led US Vice Pres Harris to convene as security council meeting over the event.

- Austria announced a 40% windfall tax on oil, gas and power companies, leading to bid in Austria renewable energy providers.

- Sweden prosecutor confirmed Nord Stream pipeline explosion was a sabotage, after finding explosive material.

- Asia closed mixed with NZX50 outperforming at +0.8%. EU indices are 0.5-0.8% higher. US futures are 0.1% to 0.4% higher. Gold +0.2%, DXY -0.2%; Commodity: Brent 0.0%, WTI +0.3%, UK Nat Gas -1.1%; Crypto: BTC +1.4%, ETH +2.0%.

Asia

- Japan Oct National CPI reading hits its fastest pace since Feb 1982 (Y/Y: 3.7% v 3.6%e; CPI Ex-Fresh Food (Core) Y/Y: 3.6% v 3.5%e). Data stretches the credibility of the BOJ's view that continued stimulus is needed to secure stable price growth.

- BOJ Gov Kuroda testified that CPI was accelerating quite a bit but reiterated that inflation might increase in coming months but to slow in next fiscal year.

- China PBOC Advisor Liu: Govt should set the GDP growth target at least at 5% for 2023; Urgent for growth to return to reasonable range.

- China Sec Times wrote that the missed hopes for a RRR cut did not mean that China policy support had ended- North Korea test-fired an intercontinental ballistic missile towards Japan with range to strike entire US.

-(CN) China PBOC: Issues capital rule for foreign investors in bond market effective from 2023; Will make it easier for foreign investors to repatriate funds from China.

-(CN) China Industry Ministry (MIIT): Will coordinate stable development of lithium-ion battery industry chain, supply chain.

-(CN) Beijing official: New local COVID cases are rapidly growing, consistently and scale is expanding; Coming weekend important to curb COVID cases.

-(IN) India Central Bank (RBI) Bulletin: Headline inflation beginning to show signs of easing.

Europe

- SNB's Maechler reiterated stance that inflation was more persistent, broader than thought. To continue to raise rates if inflation projections were above target.

- UK Nov GfK Consumer Confidence: -44 v -46e (**Note: Reading viewed as sign of relief after PM Sunak worked to stabilize the economy following the disastrous and short tenure of his predecessor Truss).

- (NO) Norway Finance Ministry: To adjust proposed base price of fish farm resource tax.

- (RU) Russian govt spokesperson Peskov: No talk of summit between Putin and Biden for time being.

Speakers/fixed income/FX/commodities/erratum

Equities

Indices [Stoxx600 -0.58% at 431.92, FTSE +0.53% at 7,385.30, DAX +0.72% at 14,369.12, CAC-40 +0.68% at 6,620.74, IBEX-35 +0.46% at 8,077.94, FTSE MIB +0.87% at 24,552.00, SMI +0.64% at 10,988.20, S&P 500 Futures +0.30%].

Market Focal Points/Key Themes: European indices open modestly higher across the board; sectors leading to the upside include energy and materials; lagging sectors include technology and real estate; reportedly Canal+ in exclusive talks to buy Orange’s TV ops; earnings expected in the upcoming US session include Spectrum Brands and Foot Locker.

Equities

- Energy: Subsea 7 [SUBC.NO] +2% (contract).

- Industrials: Klingelnberg [KLIN.CH] +16% (earnings), Kardex [KARN.CH] -11% (cuts outlook), M.J. Gleeson [GLE.UK] -10% (trading update).

- Technology: SAP [SAP.DE] -2% (analyst action).

- Matrieals: Bekaert [BERK.BE] -1.5% (sales; guidance).

Speakers

- ECB chief Lagarde reiterated stance that Council expected to raise rates further. To ensure that a phase of high inflation did not feed into inflation expectations. Reiterated that inflation was too high in the region and that a recession was unlikely to bring it down significantly.

- UK Chancellor of the Exchequer (Fin Min) Hunt commented that it would be wrong to make recession worse with public spending cuts now.

- Austria Vice Chancellor Kogler stated that up to 40% windfall tax to be applied to fossil fuel companies retroactively from July 1st.

- Hungary PM Orban stated that country would continue to rely on Russian gas supplies next year.

- US/South Korea/Japan/Australia/New Zealand/Canada joint statement: Agreed to strengthen cooperation for complete denuclearization of New Korea.

- China Culture and Tourism Ministry noted it was revising COVID-19 prevention guidelines for travel agencies, entertainment and performance venues (no details provided).

Currencies/fixed income

- USD was mixed in price action on Friday despite some push back by Fed official on market hopes for a pause in interest rate hikes. Some safe-haven flows seemed to benefit the USD after North Korea fired a suspected intercontinental ballistic missile as leaders of South Korea, Japan, the United States and other nations meet at the Asia-Paci?c Economic Cooperation (APEC) summit. USD trend looking for further confirmation that Fed would not take its foot off the accelerator.

- EUR/USD holding below 1.04 area as GBP/USD hovered around 1.19; USD/JPY probing the 140 handle.

Economic data

- (UK) Oct Retail Sales (Ex-Auto/Fuel) M/M: 0.3% v 0.6%; Y/Y: -6.7% v -6.8%e.

- (UK) Oct Retail Sales (including auto/fuel) M/M:0.6 % v 0.5%e; Y/Y: -6.1% v -6.5%e.

- (NO) Norway Q3 Overall GDP Q/Q: 1.5% v 1.3%e; GDP Mainland Q/Q: 0.8% v 0.4%e.

- (NO) Norway Sept Overall GDP M/M: 0.5% v 1.3% prior; GDP Mainland M/M: +0.4% v -0.3%e.

- (SE) Sweden Oct Unemployment Rate: 7.1% v 6.5% prior; Unemployment Rate (seasonally adj): 7.7% v 7.1%e; Trend Unemployment Rate: 7.3% v 7.3% prior.

- (SE) Sweden Q3 Total Number of Employees Y/Y: 3.9% v 4.5% prior.

- (TR) Turkey Central Bank TCMB Nov Inflation Expectation Survey: Next 12 Months: 37.5% v 37.3% prior.

- (CH) Swiss Q3 Industrial Output Y/Y: 5.2% v 5.0% prior; Industry & Construction Output Y/Y: 3.4% v 4.0% prior.

- (ES) Spain Sept House transactions Y/Y: 6.9% v 14.9% prior.

- (RU) Russia Narrow Money Supply w/e Nov 11th (RUB):15.79 T v 15.71T prior.

- (CN) Weekly Shanghai copper inventories (SHFE): 85.8K v 76.2K tons prior.

Fixed income issuance

- (IN) India sold total INR300B vs. INR300B indicated in 2024, 2029, 2036 and 2062 bonds.

- (ZA) South Africa sold total ZAR1.2B vs. ZAR1.2B indicated in I/L 2033, 2038 and 2050 Bonds.

Looking ahead

- 05:25 (EU) Daily ECB Liquidity Stats.

- 06:00 (UK) DMO to sell £4.0B in 1-month, 3-month and 6-month bills (£0.5B, £1.0B and £2.5B respectively).

- 06:00 (IS) Iceland to sell 2024, 2028 and 2037 bonds.

- 06:05 (EU) Total repayment amount per TLTRO operation.

- 06:30 (CL) Chile Q3 GDP Q/Q: -1.0%e v 0.0% prior; Y/Y: 0.2%e v 5.4% prior.

- 06:30 (CL) Chile Q3 Current Account: -$7.3Be v -$6.6B prior.

- 06:30 (IN) India Weekly Forex Reserve w/e Nov 11th: No est v $530.0B prior.

- 06:45 (US) Daily Libor Fixing.

- 07:00 (IN) India announces upcoming bill issuance (held on Wed).

- 08:00 (RO) Romania Central Bank (NBR) Nov Minutes.

- 08:00 (UK) Daily Baltic Dry Bulk Index.

- 08:00 (DE)) German Bundesbank Chief Nagel in Frankfurt.

- 08:15 (NL) ECB's Knot (Netherlands) in Frankfurt.

- 08:15 (UK) BOE's Mann in Frankfurt.

- 08:30 (CA) Canada Oct Teranet House Price Index M/M: No est v -1.9% prior; Y/Y: No est v 8.3% prior.

- 08:30 (CA) Canada Sept Int'l Securities Transactions (CAD): No est v 22.0B prior.

- 08:30 (CA) Canada Oct Industrial Product Price M/M: 0.5%e v 0.1% prior; Raw Materials Price Index M/M: 0.1%e v -3.2% prior.

- 10:00 (US) Oct Existing Home Sales: 4.40Me v 4.71M prior.

- 10:00 (US) Oct Leading Index: -0.4%e v -0.4% prior.

- 12:15 (UK) BOE’s Haskel.

- 13:00 (US) Weekly Baker Hughes Rig Count.