Notes/observations
- Trump trade remains the overwhelming theme, as world prepares for potential shift in trade relations and geopolitical landscape. European equities are lower on expectations some tariffs will hit Euro Area, not helped by pipeline of weak earnings
- As telegraphed on a Trump win, China unveiled and approved a CNY10T fiscal stimulus plan to ease massive local government debt, near the low end of analyst expectations and with no consumption-related announcements; Noted more measures will be coming; Also from China, PBOC Q3 Monetary Policy Report reiterated language and MOFCOM to continue technical talks with Europe over EU tariffs next week
- TSMC reported monthly sales for October with annual pace of growth decelerating slightly; It also noted that its investment plans in the US remain unchanged after Trump win
- Notable EU Earnings: IAG Q3 beats on top and bottom line, announces €350M buyback, shares rise to highs not seen since 2020; Monte Paschi trades up after also beating consensus, helped by tax gains; Richemont lower after H1 sales declines, highlighted on very weak Chinese sales
- Upcoming US Premarket Earnings: FLR, GLP, NRG, BAX, AXL
- Asia closed mixed with NZX50 outperforming +1.5%. EU indices are -0.4% to -1.0%. US futures are mixed% Gold -0.7%, DXY 0.0%; Commodity: Brent -1.5%, WTI -1.8%; Crypto: BTC +1.1%, ETH +3.1%
Asia
- Japan Sept Household Spending Y/Y: -1.1% v -1.8%e
- Japan Fin Min Kato reiterated view of seeing one-sided FX moves at the moment
- Japan DPP opposition party chief Tamaki noted that ruling LDP, Komeito coalition alone could not pass legislation or a budget; Would write his name for PM vote in first, second rounds.
Europe
- German Chancellor Scholz said to be resisting demands to hold a vote of confidence within days
Americas:
- FOMC cut Target Range by 25bps to 4.50-4.75% (as expected) with the decision being unanimous. Inflation remained elevated while labor conditions generally eased, Unemployment has moved higher but remained at a low level. Statement removed language of gaining confidence on inflation
- Fed chief Powell post rate decision press conference noted that the Fed took another step in reducing policy restraint. Domestic economy was strong and Fed remained squarely on dual mandate goals; Powell added that he would not resign as chair
- Sept Consumer Credit: $6.0B v $12.1Be
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 -0.59% at 506.92, FTSE -0.72% at 8,082.32, DAX -0.77% at 19,218.95, CAC-40 -0.87% at 7,360.82, IBEX-35 -0.26% at 11,540.45, FTSE MIB -0.83% at 33,698.00, SMI -0.96% at 11,824.40, S&P 500 Futures +0.03%]
Market Focal Points/Key Themes: European indices opened generally lower and remained under pressure through the early part of the session; growth threats from tariffs seen weighing on investor appetite for European stocks; among sectors holding on to gains are technology and health care; sectors leading the way lower include materials and consumer discretionary; earnings expected in the upcoming US session include Fluor, Piaggio, Baxter, Orix and Telus.
Equities
- Consumer discretionary: LVMH [MC.FR] -2.0% (China stimulus appear to fail to impress investors), Richemont [CFR.CH] -4.0% (H1 results), Bechtle [BC8.DE] -1.5% (Q3 results, guides improvement for Q4 but notes won't meet FY)
- Healthcare: Grifols [GRF.ES] +6.0% (may merger its A and B shares to make takeover bid easier), Zealand Pharma [ZEAL.DK] +6.5% (Danske raised to hold; JPMorgan initiates with overweight) - Industrials: Pirelli [PIRC.IT] +3.0% (earnings), Rheinmetall [RHM.DE] -2.0% (Russia Pres Putin noted Trump's proposals on Ukraine deserve attention) - Technology: Infineon Technologies [IFX.DE] +1.0% (TSMC monthly sales), ATOS [ATO.FR] +6.5% (capital increase) - Real Estate: Vistry [VTY.UK] -16.5% (trading update, cuts FY home completions)
Speakers
- Turkey Central Bank (CBRT) Gov Karahan Quarterly Inflation Report press conference noted that the disinflation process was continuing although it was slowly coming along. Reiterated stance that tight policy to continue until price stability was achieved
- Turkey Central Bank (CBRT) Quarterly Inflation Report (QIR) raised its end-2024 inflation forecast from 38.0% to 44.0% and raised end-2025 inflation from 14.0% to 21.0%. Lastly it also raised the end-2026 inflation from 9.0% to 12.0% (**Note: Turkey has 3-7% target range with a 5% target)
- Poland Central Bank (NBP) Kotecki reiterated view that could discuss rate cut in Mar 2025 at earliest
- China NPC Budget Committee Xu stated that debt proposal included CNY6T to swap existing debt over a planned 3-year period. China to raise 2024 local govt debt ceiling to CNY35.52T
- China Fin Min Lan Fo'an noted that local hidden debt was CNY14.3T at end-2023; Local hidden debt swap total size was CNY10 and looked to reduce hidden debt to CNY4.3T
- China PBoC Q3 Monetary Policy Report maintained its accommodative stance; Reiterated stance that policy would be flexible and targeted. To continue to keep expanding its toolbox; further improve policy framework. Enhance guiding role of policy rates. Reiterated to maintain the CNY currency (Yuan) basically stable. Further rate cuts face dual constraints of NIM and FX rate.
Currencies/fixed income
- FX price action was steady during a quiet EU sessions as participants awaited clarity on US policies after the elections. The USD was consolidating after its initial reaction to Trump's Presidential victory. Initial reaction for markets were higher US Treasury yields, steeper yield curves and higher inflation expectation all aiding the greenback.
- EUR/USD steady at 1.0780 with focus on German politics.
- GBP/USD at 1.2960 area after markets dialed back BOE rate cut expectations following the BOE rate decision and Statement on Thursday. BoE signaled it would follow a more gradual rate-cut path.
- USD/JPY at 152.45 after more Japanese rhetoric over concerns about one-way directional moves in FX.
Economic data
- (SE) Sweden Oct Maklarstatistik Housing Prices: 4.4% v 3.9% prior; Apartment Prices Y/Y: 4.3% v 2.6% prior.
- (NL) Netherlands Sept Manufacturing Production M/M: -3.0% v +2.2% prior; Y/Y: -3.3% v -0.3% prior; Industrial Sales Y/Y: -0.5% v -4.1% prior.
- (FI) Finland Sept Industrial Production M/M: -1.1% v -1.0% prior; Y/Y: 1.0% v 2.3% prior.
- (SE) Sweden Sept Private Sector Production M/M: 1.1% v 2.0% prior; Y/Y: 2.4% v 0.9% prior.
- (SE) Sweden Sept Industrial Orders M/M: -3.6% v +4.3% prior; Y/Y: -5.7% v +2.5% prior.
- (SE) Sweden Sept Industry Production Value Y/Y: -1.0% v -4.4% prior; Service Production Value Y/Y: 2.6% v 2.2% prior.
- (SE) Sweden Sept Household Consumption M/M: -0.3% v +0.9% prior; Y/Y: 0.1% v 0.2% prior.
- (CN) Weekly Shanghai Copper Inventories (SHFE): 139.7K v 153.2K tons prior.
- (TH) Thailand May Foreign Reserves w/e Nov 1st: $237.9B v $238.5B prior.
- (FR) France Sept Trade Balance: -€8.7B v -€7.7B prior; Current Account Balance: -€2,1B v -€1.2B prior.
- (FR) France Q3 Preliminary Wages Q/Q: 0.3% v 0.5%e.
- (TW) Taiwan Oct Trade Balance: $6.9B v $6.3Be; Exports Y/Y: 8.4% v 9.1%e; Imports Y/Y: 6.5% v 8.9%e.
- (AT) Austria Sept Industrial Production M/M: +0.8% v -0.5% prior; Y/Y: -0.4% v -2.3% prior.
- (CZ) Czech Oct Unemployment Rate: 3.8% v 3.8%e.
- (RU) Russia Narrow Money Supply w/e Nov 1st (RUB): 18.29T v 18.36T prior.
- (CH) Swiss Oct SECO Consumer Confidence: -37.0 v -32.5e.
- (CN) China Q3 Preliminary Current Account: $146.9B v $54.5B prior.
- (IT) Italy Sept Industrial Production M/M: -0.4% v -0.5%e; Y/Y: -4.0% v -3.5%e; Industrial Production NSA (unadj) Y/Y: -3.9% v -6.1% prior.
- (UN) Oct FAO World Food Price Index: 127.4 v 124.9 prior.
- (GR) Greece Sept Industrial Production Y/Y: 2.5% v 3.3% prior.
- (GR) Greece Oct CPI Y/Y: 2.4% v 2.9% prior; CPI EU Harmonized Y/Y: 3.1% v 3.1% prior.
Fixed income issuance
- (IN) India sold total INR220B vs. INR220B indicated in 2034 and 2073 bonds.
- (ZA) South Africa sold total ZAR1.0B vs. ZAR1.0B indicated in I/L 2038, 2046 and 2050 bonds.
Looking ahead
- (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rate unchanged at 6.50%.
- 05:25 (EU) Daily ECB Liquidity Stats.
- 05:40 (UK) BOE allotment in 7-day short-term repo operation (STR).
- 05:45 (IT) ECB’s Cipollone (Italy).
- 06:00 (IE) Ireland Sept Industrial Production M/M: No est v 4.5% prior; Y/Y: No est v 12.0% prior.
- 06:00 (IE) Ireland Oct Live Register Monthly Change: No est v -2.1K prior; Live Register Level: No est v 166.8K prior.
- 06:00 (IT) Italy Sept Retail Sales M/M: No est v -0.5% prior; Y/Y: 0.5%e v 0.8% prior.
- 06:00 (PT) Portugal Sept Trade Balance: No est v -€2.6B prior.
- 06:00 (CL) Chile Oct CPI M/M: 0.6%e v 0.1% prior; Y/Y: 4.4%e v 4.1% prior.
- 06:00 (UK) DMO to sell £4.5B in 1-month, 3-month and 6-month bills (£0.5B, £1.5B and £2.5B respectively).
- 06:00 (BE) Belgium Debt Agency (BDA) to sell OLO bonds via Ori Auction.
- 06:30 (IN) India Forex Reserve w/e Nov 1st: No est v $684.8B prior.
- 06:30 (IN) India announces upcoming bill issuance (held on Wed).
- 06:30 (IS) Iceland to sell 2028 and 2035 DGB Bonds.
- 07:00 (IS) Iceland Oct Unemployment Rate: No est v 3.3% prior.
- 07:00 (BR) Brazil Oct IBGE Inflation IPCA M/M: 0.5%e v 0.4% prior; Y/Y: 4.7%e v 4.4% prior.
- 07:15 (UK) BOE's Pill (chief economist).
- 08:00 (UR) Ukraine Oct CPI M/M: 1.2%e v 1.5% prior; Y/Y: 9.0%e v 8.6% prior.
- 08:00 (PL) Poland Central Bank (NBP) Oct Minutes (2 decisions ago).
- 08:00 (RU) Russia Gold and Forex Reserve w/e Nov 1st: No est v $628.5B prior.- 08:00 (RU) Russia Oct Official Reserve Assets: No est v $633.7B prior.
- 08:00 (UK) Daily Baltic Dry Bulk Index.
- (RO) Romania Central Bank (NBR) Interest Rate Decision.
- 08:30 (CA) Canada Oct Net Change in Employment: +27.2Ke v +46.7K prior; Unemployment Rate: 6.6%e v 6.5% prior; Full Time Employment Change: No est v +112K prior; Part Time Employment Change: No est v -65.3K prior; Participation Rate: 64.9%e v 64.9% prior; Hourly Wage Rate Y/Y: 4.5%e v 4.5% prior.
- 10:00 (US) Nov Preliminary University of Michigan Confidence: 71.0e v 70.5 prior.
- 12:00 (US) USDA World Agricultural Supply Demand Estimates (WASDE) Crop Report.
- 12:00 (EU) Potential sovereign ratings after European close (Fitch on Spain & Poland sovereign ratings).
- 13:00 (US) Weekly Baker Hughes Rig Count data.
- 16:00 (US) Fed’s Bowman.
- 18:00 (CO) Colombia Oct CPI M/M: 0.2%e v 0.2% prior; Y/Y: 5.7%e v 5.8% prior.
- 18:00 (CO) Colombia Oct CPI Core M/M: 0.2%e v 0.3% prior; Y/Y: 6.5%e v 6.6% prior.
- 20:30 (CN) China Oct CPI Y/Y: 0.4%e v 0.4% prior; PPI Y/Y: -2.5%e v -2.8% prior.
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