Archives of “October 2019” month

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European equity close: Solid day of broad gains

  
Analysis, Global Indices

Closing changes for the main European bourses:

Closing changes for the main European bourses:
  • UK FTSE 100 +0.9%
  • German DAX +0.6%
  • Italy MIB +0.8%
  • French CAC +0.4%
  • Spain IBEX +0.1%
I highlighted the break higher in UK stocks yesterday and that continued with a very good day today.
The latest reports confirm that Johnson will table a motion for a general election on Monday. That’s been rumored for hours and but it’s putting further pressure on GBP.

ECB’s Draghi: Downside risks are prominent, inflation muted

  
  Analysis

Highlights of Draghi’s opening statement:

Draghi Oct 22, 2019
  • ECB is providing substantial monetary policy support
  • Services and construction show ongoing resilience but some moderation
  • Risks to the economic outlook remain on the downside
  • Headline inflation likely to decline further
  • Underlying inflation to pick up over medium term
  • Incoming data point to moderate but positive growth in H2
  • Weak growth delays pass-through to inflation
  • Ample degree of monetary policy is still necessary
  • Fiscal stance is ‘mildly expansionary’ and providing some support
  • Governments with fiscal space should act in a timely manner

There wasn’t much in the opening statement and the comments about downside risks weren’t a surprise. The euro has edged higher.

ECB leaves key rates unchanged in October meeting

  
Analysis, Economy

The ECB announces its monetary policy decision for 24 October 2019

The ECB announces its monetary policy decision for 24 October 2019
  • Prior decision
  • Deposit facility rate -0.50%
  • Main refinancing rate 0.00%
  • Marginal lending facility 0.25%
  • Sees rates at present or lower levels until near inflation goal
  • To continue with bond purchases for as long as needed
  • To stop bond purchases shortly before raising rates
  • To reinvest QE debt for extended period of time after first rate hike
  • Confirms to begin bond purchases of €20 billion per month starting from 1 November
Pretty much a non-event as the statement reads out the obvious and there was no change to the deposit rate facility. EUR/USD holds steady at 1.1126 and is rightfully unchanged from the decision as there is nothing to add to the September stimulus package.
Now, it’s over to Draghi’s farewell press conference at 1230 GMT. The full statement, for those interested:

At today’s meeting the Governing Council of the European Central Bank (ECB) decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.50% respectively. The Governing Council expects the key ECB interest rates to remain at their present or lower levels until it has seen the inflation outlook robustly converge to a level sufficiently close to, but below, 2% within its projection horizon, and such convergence has been consistently reflected in underlying inflation dynamics.

As decided at the last Governing Council meeting in September, net purchases will be restarted under the Governing Council’s asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November. The Governing Council expects them to run for as long as necessary to reinforce the accommodative impact of its policy rates, and to end shortly before it starts raising the key ECB interest rates.

The Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when it starts raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.

Eurozone October flash manufacturing PMI 45.7 vs 46.0 expected

  
Analysis, Economy

Latest data released by Markit – 24 October 2019

  • Prior 45.7
  • Services PMI 51.8 vs 51.9 expected
  • Prior 51.6
  • Composite PMI 50.2 vs 50.3 expected
  • Prior 50.1
The figures here are sort of foreshadowed by the French and German figures earlier with the manufacturing reading unchanged from September and services showing a mild improvement -nothing too noticeable.
Looking at the details, the business expectations component for the services reading actually fell to its lowest level since June 2013 and I think that sort of tells you that things are not doing all too well if you dig a little deeper.
Overall, it is suggestive that the Eurozone economy pretty much went nowhere in October as the economic stagnation/slump in the region continues in Q3.
EUR/USD is marked lower now to 1.1133 as hopes of a rebound continue to be dashed and we’re seeing bond yields slump again to near session lows on the day.

Moody’s on Japan – A1 rating affirmed, stable outlook maintained

  
Analysis, Economy
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Moody’s affirms Japan’s A1 ratings; maintains stable outlook

  •  says expects Japan’s fiscal and debt metrics to stabilize in the next few years
  •  says Japan’s sovereign rating and outlook continue to be driven over medium term by impact of social considerations on economy and public finances
  •  says traction on economic reform likely to partly offset pressure on potential growth from population decline

North Korea says dictator Kim Jong Un and US President Trump continue to have close relations and trust.

  
Analysis, Politics

KCNA (north Korean state media) say Kim Jong Un and Donald Trump continue to have close relations and trust.

  • But apart from that US political circles remain hostile to North Korea
Yesterday we got this out of NK:
  • North Korean dictator says will withdraw South Korean facilities from Mount Kumgang Tourist Region
Further details on this are that Kim has ordered the demolition of hotels in the area that were built by South Korea.
KCNA (north Korean state media) say Kim Jong Un and Donald Trump continue to have close relations and trust.

US Indices : close near highs for the day.

  
Analysis, US Market

S&P index and NASDAQ index close near highs for the day

The broader stock indices defined by the S&P index and NASDAQ index are closing the session near the highs.  The Dow is also higher but off the highs for the day.
The final numbers are showing:
  • S&P index +8.58 points or 0.29% at 3004.57
  • NASDAQ index up 15.498 points or 0.19% at 8119.79. The high reached 8122.88.
  • The Dow rose by 45.80 points or 0.17% at 26834.
Microsoft (3.4% weighting in the Dow Jones) is reporting and earnings and revenue beat after the close.
  • Revenues came in at $33.1 billion versus an estimate of $32.2 billion
  • earnings-per-share came in at $1.38 versus an estimate of $1.24

The price of MSFT is trading above and below the closing level and after hour trading despite the beats.

France’s Macron demands Nov 15 Brexit deadline – report

  
Analysis, Politics

Telegraph report

Macron is drawing a line in the sand. However Macron tends to draw lines in very fine sand, or particularly windy days. A report from BBC says Johnson asked Macron to veto the extension.
Here is the Telegraph report.
The French President’s hardline stance, designed to exert maximum pressure on MPs in London to back the deal,  has horrified diplomats in Brussels, who fear the short delay raises the risk of an accidental no deal Brexit.
Separately, a report from Reuters confirms there will be no EU decision on an extension today and that they will meet again on Friday. The report says a 3-month extension is most likely.
This is from Sky News:
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