TradeTheNews.com Staff
TradeTheNews.com
EU Mid-Market Update: Major European PMI readings improve but remain in contraction; UK Supreme Court rejects Scotland bid to hold a 2nd referendum.
Notes/Observations
- Major European Manufacturing PMI’s beat (France, Germany, UK, Euro Zone) but all components remain in contraction zones across the board. Manufacturing continues to surprise slightly in a worsening EU outlook.
- UK Supreme Court rejected Scotland Independence Referendum.
- In China, COVID concern remains as Beijing decided to maintain COVID curbs until a turning point in current outbreak is apparent. Asked residents not to leave the city unless necessary. Elsewhere on China, IMF maintained 2022 and 2023 GDP growth forecasts.
- ECB De Guindos stated Euro-Zone likely to contract in Q4 and Q1.
- Asia closed mostly higher except for NZX50 down -0.9%. EU indices are mixed, with FTSE +0.5%. US futures are +0.2%. Gold -0.1%, DXY -0.2%; Commodity: Brent +0.6%, WTI +0.6%, UK Nat Gas +10.6%; Crypto: BTC +5.5%, ETH +7.5%.
Asia
- Reserve Bank of New Zealand (RBNZ) raised the Official Cash Rate (OCR) by 75bps to 4.25% (as expected).
- Australia Nov Preliminary PMI Manufacturing: 51.5 v 52.7 prior.
- (SG) Singapore Q3 Final Q/Q: 1.1% v 1.5%e; Y/Y: 4.1% v 4.3%e.
- China PBOC Advisor Wang saw only limited room for China to cut interest rates.
Americas
- Fed's Mester (FOMC voter) reiterated stance that restoring price stability was FED's number one focus.
- Fed's George (FOMC voter) noted that housing prices remained above pre-pandemic trend and one could argue it was in part due to QE.
Energy
- Weekly API Crude Oil Inventories: -4.8M v -5.8M prior.
Speakers/fixed income/fx/commodities/erratum
Equities
Indices [Stoxx600 +0.30% at 437.52, FTSE +0.57% at 7,495.17, DAX +0.08% at 14,433.46, CAC-40 +0.15% at 6,667.79, IBEX-35 +0.12% at 8,334.95, FTSE MIB -0.19% at 24,543.00, SMI +0.15% at 11,091.20, S&P 500 Futures +0.19%].
Market Focal Points/Key Themes: European indices open mixed with an upward bias and later moved firmly into the green; sectors leading higher include materials and energy; lagging sectors include industrials and real estate; Glencore reaches agreement to sell its Cobar mine in Australia; focus on release of FOMC minutes later in the day; earnings expected during the upcoming US session include John Deere.
Equities
- Consumer discretionary: Elior [ELIOR.FR] +2.5% (earnings; cuts FY23 outlook).
- Utilities: United Utilities [UU.UK] +1% (earnings).
- Financials: Credit Suisse [CSGN.CH] -6% (business update).
- Healthcare: Alliance Pharma [APH.UK] -22% (trading update; CEO taking time off).
- Industrials: Volkswagen [VOW3.DE] -1% (reaches wage agreement with workers in Western Germany).
- Technology: SoftwareONE [SWON.CH] +5% (earnings; buyback), De La Rue [DLAR.UK] -23% (earnings).
- Materials: Glencore [GLEN.UK] +4% (divestment), Voestalpine [VOE.AT] +2% (Deustche Bank raised to Buy from Hold), Johnson Matthey [JMAT.UK] -5% (earnings).
Speakers
- ECB’s De Guindos (Spain) stated that the Euro-Zone economy likely to contract in both Q4 and Q1.
- Iceland Central Bank Policy Statement noted MPC would continue to ensure reins of monetary policy were sufficient to reduce inflation to the target within an acceptable time frame.
- Czech Central Bank (CNB) Gov Michl: Interest rates currently at a level that cools economic activity.
- Poland Central Bank (NBP) Kotecki believed that interest rates should rise further. He added that country might already be experiencing stagflation.
- BOJ said to conduct digital Yen trial with domestic megabanks.
- IMF maintained its China 2022 and 2023 GDP growth forecasts at 3.2% and 4.4% respectively.
- EU said to be considering imposing $65-70/bbl price cap for Russian oil. -
Currencies/fixed income
- USD downward correction continued ahead of some key US data. Dealers noted that recent weakness in US economic numbers have thwarted any attempts by the USD to recover. Focus on the upcoming release of FOMC Nov Minutes.
- EUR/USD drifted off its best levels of the session despite the major European PMI readings beating consensus. Dealers noted that PMIs did remain in contraction territory, but the data suggested the slump in region might be shallower than feared.
- GBP/USD was holding above the 1.19 level. UK Supreme Court rejected Scottish government could call a second independence referendum.
Economic data
- (NO) Norway Oct Credit Indicator Growth Y/Y: 5.2% v 5.1% prior.
- (ZA) South Africa Oct CPI M/M: 0.4% v 0.2%e; Y/Y: 7.6% v 7.4%e.
- (ZA) South Africa Oct CPI Core M/M: 0.5% v 0.3%e; Y/Y: 5.0% v 4.9%e.
- (TW) Taiwan Oct Industrial Production Y/Y: -3.6% v -2.8%e.
- (FR) France Nov Preliminary Manufacturing PMI: 49.1 v 47.0e (3rd consecutive contraction); PMI Services: 49.4 v 50.6e; PMI Composite: 48.8 v 49.4e.
- (DE) Germany Nov Preliminary Manufacturing PMI: 46.7 v 45.0e (5th straight contraction); PMI Services: 46.4 v 46.2e; PMI Composite: 46.4 v 44.9e.
- (IS) Iceland Central Bank (Sedibanki) raised the 7-Day Term Deposit Rate by 25bps to 6.00%.
- (EU) Euro Zone Nov Preliminary Manufacturing PMI: 47.3 v 46.0e (5th straight contraction); PMI Services: 48.6 v 48.0e; PMI Composite: 47.8 v 47.0e.
- (PL) Poland Oct Real Retail Sales M/M: 0.3% v 2.4%e; Y/Y: 0.7% v 3.2%e; Retail Sales Y/Y: 18.3% v 21.0%e.
- (PL) Poland Oct Construction Output Y/Y: 3.9% v 0.4%e.
- (UK) Nov Preliminary Manufacturing PMI: 46.2 v 45.8e (4th straight contraction); PMI Services: 48.8 v 48.0e; PMI Composite: 48.3 v 47.5e.
- (ZA) South Africa Q4 BER Business Confidence: 38 v 39 prior.
Fixed income issuance
- (IN) India sold total INR220B vs. INR220B indicated in 3-month, 6-month and 12-month bills.
- (SE) Sweden sold SEK5.0B vs. SEK5.0B indicated in 3-month Bills; Avg Yield: 1.6910% v 1.5823% prior; Bid-to-cover: 1.56x v 1.56x prior.
- (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 2.125% May 2032 Bonds; Avg Yield: 3.24% v 3.72% prior; bid-to-cover: 3.20x v 1.79x prior.
Looking ahead
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:30 (DE) Germany to sell €1.0B in 1.80% Aug 2053 Bund.
- 05:30 (PL) Poland to sell 2024, 2027, 2028, 2032 and 2033 Bonds.
- 06:45 (US) Daily Libor Fixing.
- 06:00 (EU) EU Commission to sell combined €2.0B in 3-month and 6-month bills.
- 06:30(UK) DMO to sell £3.5B in 0.25% Jan 2025 Gilts.
- 06:00 (RU) Russia to sell OFZ Bonds (3 tranches).
- 06:45 (US) Daily Libor Fixing.
- 07:00 (US) MBA Mortgage Applications w/e Nov 18th: No est v +2.7% prior.
- 07:00 (UK) Weekly PM Question time in House.
- 07:00 (PT) ECB’s Centeno (Portugal).
- 07:30 (ES) ECB's De Cos (Spain).
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- 08:30 (US) Oct Preliminary Durable Goods Orders: 0.4%e v 0.4% prior; Durables (Ex-Transportation): 0.0%e v -0.5% prior; Capital Goods Orders (non-defense/ex-aircraft): 0.0%e v -0.4% prior; Capital Goods Shipments (non-defense/ex-aircraft): +0.2%e v -0.5% prior.
- 08:30 (US) Initial Jobless Claims: 225Ke v 222K prior; Continuing Claims: 1.52Me v 1.507M prior.
- 09:45 (US) Nov Preliminary S&P/Markit Manufacturing PMI: 50.0e v 50.4 prior; PMI Services: 48.0e v 47.8 prior; PMI Composite: 48.0e v 48.2 prior.
- 10:00 (US) Nov Final University of Michigan Confidence: 55.0e v 54.7 prelim.
- 10:00 (US) Oct New Home Sales: 570Ke v 603K prior.
- 10:00 (UK) Chancellor of the Exchequer (Fin Min) Hunt in Parliament on autumn budget.
- 10:30 (US) Weekly DOE Oil Inventories.
- 10:30 (UK) BOE’s Pill (chief economist).
- 11:00 (RU) Russia Oct Industrial Production Y/Y: -3.9%e v -3.1% prior.
- 11:00 (RU) Russia Oct PPI M/M: No est v -0.8% prior; Y/Y: No est v 3.8% prior.
- 11:30 (US) Treasury to sell 4-Week and 8-Week Bills.
- 11:30 (US) Treasury to sell 17-Week Bills.
- 12:00 (US) Weekly EIA Natural Gas Inventories.
- 12:00 (CA) Canada to sell 30 Year bonds.
- 13:00 (US) Weekly Baker Hughes Rig Count.
- 14:00 (US) FOMC Oct Meeting Minutes.
- 14:00 (AR) Argentina Sept Economic Activity Index (Monthly GDP) M/M: No est v 0.4% prior; Y/Y: No est v 6.4% prior.
- (CO) Colombia Oct Retail Confidence: No est v 23.4 prior; Industrial Confidence: No est v 7.0 prior.
- 14:00 (NZ) RBNZ Gov Orr in Parliament.
- 16:00 (KR) South Korea Oct PPI Y/Y: No est v 8.0% prior.
- 16:30 (CA) Bank of Canada (BOC) Gov Macklem.
- 19:30 (JP) Japan Nov Preliminary PMI Manufacturing: No est v 50.7 prior; PMI Services: No est v 53.2 prior; PMI Composite: No est v 51.8 prior.
- 20:00 (KR) Bank of Korea (BOK) Interest Rate Decision: Expected to raise 7-Day Repo Rate by 25bps to 3.25%.
- 21:00 (SL) Sri Lanka Central Bank (CBSL) Interest Rate Decision: Expected to leave Key Rates unchanged.
- 21:35 (CN) China to sell 3-year bonds.
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