UK Market Snapshot
UK markets finished mixed yesterday. The FTSE 100 index reached its highest level since May 28, as a dismal US jobs report spurred hopes of a near-term continuation of quantitative easing by the Federal Reserve. Reckitt Benckiser jumped 5.2%, after the company posted a rise in its Q3 2013 net revenue and raised its full-year sales forecast. BHP Billiton gained 4.1%, after it hiked its annual iron ore production guidance. Randgold Resources advanced 4.0%, tracking surge in gold prices. GKN gained 1.7%, after reporting a rise in its Q3 2013 group sales and profits. Amongst the laggards, International Consolidated Airlines Group declined 1.5%, after a broker downgraded the stock to ‘Hold’ from ‘Buy. easyJet fell 1.6%, after a broker lowered its target price on the stock. The FTSE 100 advanced 0.6%, to close at 6,695.7, while the FTSE 250 fell 0.1% to settle at 15,512.5.
US Market Snapshot
US markets closed higher yesterday, after weaker-than-expected employment data in the US raised investor expectation that the Federal Reserve would maintain its economic stimulus till next year. Whirlpool rallied 11.6%, after it posted a rise in its Q3 earnings and raised its full year earnings forecast. Lockheed Martin advanced 3.8%, after the company hiked its 2013 earnings forecast following a rise in its Q3 profit. EI du Pont de Nemours rose 1.2%, after the company posted a rise in its Q3 2013 profit. Bucking the trend, Netflix slumped 9.2%, after Carl Icahn lowered his stake in the company. Coach plunged 7.5%, after it posted a 1.6% decline in its Q1 profit. EMC declined 4.8%, after it lowered its full-year sales and profit forecasts. The DJIA rose 0.5%, to settle at 15,467.7, while the NASDAQ advanced 0.2%, to close at 3,929.6. The S&P 500 gained 0.6%, to settle at 1,754.7.
Europe Market Snapshot
Other European markets finished higher yesterday, amid a mixed set of quarterly corporate results and soft US jobs data. Insurer, Gjensidige Forsikring surged 8.0%, on upbeat Q3 2013 earnings and indicated that it would pay an extraordinary dividend of 6 kroner a share (US$1.01). Other insurers, Muenchener Rueckversicherungs and Allianz gained 2.2% and 1.4%, respectively. Swedbank jumped 3.6%, after it registered a rise in its Q3 profit. Novartis added 2.0%, after it raised its full-year sales guidance. On the negative side, ArcelorMittal declined 3.7%, after a broker downgraded the stock to ‘Sell’ from ‘Buy’. Deutsche Lufthansa retreated 2.4%, after the company issued a disappointing profit forecast for 2013. The FTSEurofirst 300 index gained 0.5%, to close at 1,288.1. Among other European markets, the German DAX Xetra 30 rose 0.9%, to close at 8,947.5, while the French CAC-40 advanced 0.4%, to settle at 4,295.4.
Asia Market Snapshot
Markets in Asia are trading mostly higher this morning, as disappointing US payrolls data led to speculation that the US Federal Reserve would delay scaling back its stimulus measures until next year. In Japan, Nidec Copal Electronics is trading 3.5% higher, after it raised its 2014 net profit forecast. Tokyo Electron is trading 0.9% higher, following reports that the company is likely to register a less-than-expected ¥3 billion operating loss in the six-month period ended September. In Hong Kong, Aluminum Corp. of China is trading 3.3% higher, tracking overnight gains in its US peer, Alcoa. In South Korea, Hyundai Merchant Marine is trading 13.9% higher, after it refinanced KRW280 billion of debt. The Nikkei 225 index is trading 0.2% higher at 14,739.9. Hang Seng index is trading 0.3% up at 23,381.5, while the Kospi index is trading 0.6% lower at 2,044.6.
Commodity, Currency and Fixed Income Snapshots
Crude Oil
At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.02% or US$0.02 lower at US$109.95 per barrel. Yesterday, the contract advanced 0.3% or US$0.33, to settle at US$109.97 per barrel. The American Petroleum Institute reported that the US crude inventories rose 3 million barrels for the week ended October 18.
Gold
At 0330GMT today, Gold futures contract is trading 0.13% or US$1.70 lower at US$1340.90 per ounce. Yesterday, the contract rose 2.04% or US$26.80, to settle at US$1342.6 per ounce, as downbeat US employment data weighed on the greenback boosting demand for the yellow metal.
Currency
At 0330GMT today, the EUR is trading at US$1.3792 against the USD gaining 0.09%, ahead of the Eurozone’s consumer confidence data due later today, which is expected to record a rise in October. Yesterday, the EUR strengthened 0.78% versus the USD, to close at US$1.3779. The greenback registered losses after the much awaited US non-farm payrolls data showed that the US economy added fewer jobs than expected in September.
At 0330GMT today, the GBP is trading at US$1.6249 against the USD gaining 0.11%, as investors eagerly await the of the minutes from BoE’s latest policy meeting scheduled for release later today. Yesterday, the GBP strengthened 0.61% versus the USD, to close at US$1.6231, as dismal non-farm payroll data in the US weighed on the greenback.
Fixed Income
In the US, long term treasury prices rose, pushing the yields lower, after the US September non-farm payrolls came in below market expectations. Yesterday, yield on 10-year notes fell 9 basis point to 2.54%, while yield on 2-year notes lost 2 basis point to 0.31%. Meanwhile, 30-year bond yield fell 7 basis point to 3.61%.
Key Economic News
UK September public finances declined
UK reported public sector net cash requirement (PSNCR) deficit of £0.6 billion in September, following a revised deficit of £2.7 billion in August. Market had anticipated UK to report PSNCR surplus of £9.0 billion in September. Additionally, UK public sector net borrowing rose less than anticipated to surplus of £9.4 billion in September, compared to a revised surplus of £10.8 billion reported in the previous month. Meanwhile, public sector net borrowing excluding financial interventions stood at £11.1 billion in September, following a revised net borrowing of £12.5 billion recorded in the previous month.
Loose monetary to stay, indicates BoE’s Bean
Charlie Bean, the deputy governor of the Bank of England (BoE) stated that although the UK economic recovery is gaining momentum, monetary policy will remain supportive until the economy is fully recovered.
Switzerland’s September trade surplus expanded more than anticipated
Switzerland’s trade surplus widened to CHF 2.5 billion in September, following a revised surplus of CHF 1.9 billion recorded in August, more than market expectation of a surplus of CHF 2.0 billion. Meanwhile, Switzerland’s exports climbed 2.0% in September on a monthly basis, compared to a 0.8% rise reported in the preceding month and imports rose 3.1% (MoM) in September, following a revised 3.9% drop recorded in the previous month.
Non-farm payrolls in the US climbed less than anticipated, while unemployment rate dropped unexpectedly in September
US total non-farm payroll employment advanced by 148K jobs in September, less as compared to a revised payroll of 193K reported in the preceding month. Market had expected non-farm payrolls to rise by 180k in September. Similarly, the manufacturing payroll employment rose by 2K in September, after recording revised 13K payrolls in the previous month and change in private payrolls rose by 126K in September, following a revised rise of 161K in August. However, the unemployment rate unexpectedly declined to 7.2% in September from a rate of 7.3% reported in August. Additionally, average hourly earnings in the US on a monthly basis grew 0.1% in September, compared to a revised 0.3% gain recorded in the previous month. Additionally, on a monthly basis, average weekly hours stood unchanged at 34.5 in September.
Redbook Index in the US continued to contract in the last week
Redbook Index in the US fell 1.5% on a monthly basis for the week ended 13 October 2013, following a decline of 1.4% in the prior week. Meanwhile, the index on a seasonally adjusted annual basis rose 2.9% for the week ended 13 October 2013, slower as compared to a 3.2% rise recorded in the week earlier.
TIC long term purchases in the US dropped unexpectedly in September
The US net Treasury International Capital (TIC) long term purchases on a seasonally adjusted basis contracted to US$8.90 billion in September, from a revised net purchase of US$31.0 billion reported in the previous month. Market had expected net purchases of US$31.0 billion September. Meanwhile, the monthly total net TIC sold treasury worth US$2.9 billion in September, compared to purchases of US$56.7 billion recorded in the previous month.
Richmond Fed manufacturing activity in the US climbed unexpectedly in October
According to the Federal Reserve Bank of Richmond, its composite index of manufacturing activity in the central Atlantic region in the US rose to a level of 1.0 in October, compared to a flat reading reported in the previous month. Market had expected the index to remain unchanged in October.
Construction spending in the US advanced more than anticipated in August
According to the US Census Bureau, construction spending in the US rose 0.6% on a monthly basis in August, more than market expectation of a rise of 0.4% and following a revised rise of 1.4% reported in the previous month.
China MNI business sentiment declined in October
The flash MNI business sentiment indicator in China fell to a level of 55.3 in October, from a level of 58.0 recorded in September.