China Railways has halted China-Europe trains for the first time

Traffic bottlenecks cited, related to restrictions to control COVID-19 spread.

  • Railway traffic from China to Europe via the border crossings of both Alashankou and Erenhot has been halted.
  • China Railways has released an official mandate to stop the loading of outgoing trains via these border crossings, starting on Monday 25 October. The ban will be in place for until 1 November for Alashankou and until 28 October for Erenhot.
Under the strict restrictions, the flow of goods across the border has come to a standstill, with roughly 150 goods trains and 7,000 wagons currently waiting to cross the border and another hundred trains and 5,000 wagons delayed en route. It is not only transit cargo from China that is affected. Japanese and Korean shippers are also facing problems losing out on the extra transit time.

Traffic bottlenecks cited, related to restrictions to control COVID-19 spread. 

Central bank meetings this week – the ECB’s the most significant

A snippet now via Scotia:
  • The ECB decision on Thursday could be the most significant meeting to global markets.
  • It is fairly widely expected that President Lagarde will lead an effort to push back on pricing for hikes to the -0.5% deposit rate. At present, markets are pricing most of a 10bps hike by next summer, though a return to a zero rate is well down the road. 
  • Expect lots of talk of base effects, transitory drivers and slack in terms of its inflation logic going forward.
And, this via ABN Amro:
  • Effort to push back on rate hike expectations might prove challenging – The ECB looks set to take markets to task about what it sees as unwarranted expectations for early and aggressive policy rate hikes, at its meeting later this week.
EUR tried higher overnight but did not sustain it:
The European Central Bank statement is Thursday 28 October 2021 

Saudi Aramco warns that spare oil production capacity is shrinking, a “huge concern”

Saudi Aramco is the world’s largest oil exporter, its head spoke in a Bloomberg interview.

  • said that “spare capacity is shrinking”, adding that it was a “huge concern”.
  • forecast that a pick up in the aviation sector in 2022 could deplete spare capacity
  • “It’s now getting to a situation where there’s limited supply — whatever is left that’s spare is declining rapidly.”
OPEC+ next meet on November 4 and so far there is no indication of an increase in supply beyond what is already planned. A tight market is contributing to high prices, these comments from Saudi Aramco indicate that won’t be changing much soon.
Saudi Aramco is the world's largest oil exporter, its head spoke in a Bloomberg interview.

On the economic calendar in Asia today – Australian Q3 CPI, China industrial profits

2145 GMT New Zealand trade balance for September

  • prior NZD -2144m
  • exports prior NZD 4.35bn
  • imports prior NZD 6.49bn

2301GMT UK data – BRC Shop Price Index y/y for September

  • prior -0.5% y/y
  • British Retail Consortium monthly shop price index

0100 GMT New Zealand ANZ business survey for October

  • Business confidence for October, preliminary: -8.6 (prior -7.2)
  • Activity Outlook preliminary 26.2 (prior 18.2)
  • short preview post here

0030 GMT Australian Q3 inflation data 


  • expected 0.8% q/q, prior 0.8%
  • For the y/y, expected 3.1, prior 3.8% (lower expected mainly due to base effects)

Core inflation: Trimmed mean

  • expected 0.5% q/q, prior 0.5%
  • expected 1.8% y/y, prior 1.8%

The RBA target band for core inflation is sustainably in a 2 to 3% band. You can see its (trimmed mean) is not within that band at present and tomorrow’s data is not expected there either.
The weighted median is another measure of core inflation.

  • expected 0.5% q/q, prior 0.5%
  • expected 1.9% y/y, prior was 1.7%

Short preview post here

0130 GMT China Industrial Profits for September 


  • prior +10.1% y/y
  • prior +49.5% YTD y/y
  • raw material price inflation is contributing to higher manufacturing costs, subdued consumer spending is compressing demand, add in the coal crisis creating power shortages; all are weighing on business profitability in China.

S&P and NASDAQ close higher for the second consecutive day

S&P and Dow hit an intraday all-time high

The major indices close modestly higher with the S&P and Dow hitting a intraday all-time high.

The final numbers are showing:
  • Dow industrial average up 14.68 points or 0.04% at 35755.83.
  • S&P index rose 8.19 points or 0.18% at 4574.67
  • NASDAQ index closed up 9.01 points or 0.06% at 15235.71.

After the close:

  • Microsoft beat on the top and bottom line after the close.  Revenues $45.32 billion versus $43.97 billion estimate. EPS
  • Alphabet beat on top and bottom line after closes well. Alphabet revenues $65.12 billion versus $63.34 billion estimate. Earnings-per-share $27.99 versus $23.48 estimate
Microsoft is trading modestly higher in extended hours trading while Alphabet is initially trading down about -1.08% (PS Alphabet is now trading higher by 0.6% in volatile trading) .
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