By Dean Popplewell
Monday, October 1: five things the markets are talking about
Canada & # 39; s loonie, the Mexican peso, along with the North American stock futures are & # 39; night after the USA and Canada confirmed a deal to the old & # 39; to save NAFTA, now USMCA – United States, Mexico, Canada agreement.
In Asia, trading volumes were below normal during the night, with Labor Day in Australia, Hong Kong and China until 7 October.
However, data from China during the weekend showed that the processing industry weakened in September as domestic and export demand softened. Their production PMI value fell to 50 – a strong reminder that trade disputes are beginning to have real consequences for the Chinese economy.
In Japan, the tankan survey showed that the business confidence of the major Japanese manufacturers deteriorated in September for the third quarter in a row.
Elsewhere, in front of the central bank, the Reserve Bank of Australia (RBA) is expected to leave its monetary policy unchanged at + 1.5% (2 October), while the Reserve Bank of India (RBI) may have to make a hike to support a weakening of the INR (4 October). During the week, the PMI & # 39; s for the final production and services for September are placed.
North American employment data close the week with Friday Non-farm wage administration (NFP) and Canada job report (5th of October).
1. Mixed start of stocks
Emerging markets started in mixed mood in the fourth quarter as signs of weakness in manufacturing activity in China limited the optimism of a renewed USMCA deal.
The Nikkei share in Japan rose on average to almost three decades, while a prolonged weakening of the yen (¥ 114) improved the export results of Japanese companies. The Nikkei closed the day with + 0.52%, the strongest since November 1991. The Nikkei has risen by + 7% since the beginning of September, supported by the amortization of the yen and purchases by foreign investors.
Note: The Bank of Japan's quarterly & # 39; tankan & # 39; research into business sentiment showed major manufacturers that the dollar had an average of $ 107.40 yen for the 2018/2019 fiscal years.
At the bottom, the Aussie shares fell overnight to their lowest point in fourteen days in a lightly traded session & # 39; at night when the financial pressure again dropped under pressure of devastating interim findings from a high-profile research into the sector. The S & P / ASX 200 index decreased by -0.6%. In South Korea, Kospi's share index declined Monday amid subdued broader Asian peers, while foreign investors shortened their equity positions. The index decreased by -0.18%.
Note: Chinese markets were closed for a public holiday.
In Europe, the Italian FTSE MIB index rose by + 0.5%, as a result of which some of Friday's steep losses (-3.7%) were recovered on news that the country's anti-establishment government had broadened its budget deficit target.
US stocks will be deep in the & # 39; black & # 39; (+ 0.6%).
indices: Stoxx50 + 0.6% at 3.421, FTSE + 0.1% at 7.520, DAX + 0.7% at 12.335, CAC-40 + 0.4% at 5.513, IBEX-35 + 0.6% at 9.448, FTSE MIB 1.5% at 21.021, SMI + 0.3% on 9.118, S & P 500 Futures + 0.6%
2. Brent oil hits four years high before Iran sanctions, gold lower
Oil prices have risen, with international benchmark Brent reaching a high point in four years, as US sanctions against Tehran pushed Iranian raw exports, tightening supply, while other major exporters increased their production.
Note: Sanctions against Iran – will focus on the oil sector from November 4.
Brent's crude oil futures are + $ 83.09, + 36c higher or + 0.4% above the end of Friday. USA West Texas Intermediate (WTI) raw futures are + 19c higher, or + 0.3%, at + $ 73.44 per barrel.
WTI is supported by Friday's report on stagnating US counts, which could indicate a slowdown American raw production.
On the weekend it was reported that President Trump called Saudi Arabia's King Salman Saturday to discuss ways to maintain sufficient supply if Iranian exports were hit by sanctions.
Note: the expectation is that -1.5 million bps of Iranian oil will actually go offline on November 4.
In anticipation of the openness, gold prices are submerged as the & # 39; big & # 39; dollar firm's against G10 couples in the aftermath of Fed's indications last week that it will pursue a tighter monetary policy – after interest rates +25 basis points, the Fed said it planned for four additional increases by the end of 2019 and another in 2020.
Spot gold drops by -0.5% to + $ 1,186.29. On Friday, gold hit the lowest since August 17 at +1.880.34 dollars per ounce. US gold futures have gone -0.5% to + $ 1,190.60 per ounce.
3. Interest rates on Italian bonds extend last week's increase due to budgetary concerns
The interest on Italian bonds has aggressively supported this morning and prolongs last week's move, as a news report suggested that the Italian budget proposal would be rejected by the European Commission.
The 2-year BTP bond yield in Italy has increased +18 bps to + 1.23%, while the return on its longer 10-year BTP bond rose +9 bps by + 3.24%, while premium investors demand Italian paper above German Bunds is +274 bps, last week as good as +225 bps.
Elsewhere the yield is up US 10-year government bonds rose from +1 bps to + 3.07%, while the yield on the 2-year bond rose +1 bps to + 2.82%. The 10-year Bund-yield of Germany has gained +1 bps to + 0.48%.
4. Dollar finds some traction, but goes back into fashion
Delivered with USMCA, it is no surprise to see it the currencies of the respective countries become a bit stronger. The MXN has increased + 0.9% to $ 18,548, the strongest in almost two months and the biggest increase in more than two weeks. The CAD has increased + 0.75% to C $ 1.2800, the strongest in five months.
The EUR (€ 1.1614) is still being troubled by concerns about an increase in the Italian government deficit after the Italian government had agreed to a higher than expected budget deficit target that would put Italy on a collision course with the European Commission.
The Japanese yen dropped -0.2% to ¥ 114, the weakest in about 11 months.
5. British consumer loans rose last month
Data this morning have shown that the British consumer loans on credit cards have increased in August, indicating a new spending month.
Data from the Bank of England (BoE) showed that borrowing on credit cards and other unsecured forms of lending in July rose to + 1.1 pounds from + £ 0.8 billion. The market expected a header of + £ 1.4B.
British consumer loans also rose, with banks lending to consumers in August + £ 4B, net of repayments, of GBP3.8 billion in July, in a further signal of steady growth in household spending.
The number of new home loans approved by lenders in August also rose slightly compared to July, to +66,440.
Other European data showed that the final PMIs in manufacturing industry in the eurozone fell slightly lower in September to 53.2 from 53.3 in the flash and fell from 54.6 in August.
Markit emphasized that exports increased only slightly, affecting both total order growth and production, with global trading issues pushing confidence to an almost triennial low.
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