Daily US Opening News And Market Re-Cap: November 1
- Focus for the US session on the labour market, with a number of releases ahead of tomorrow's nonfarm payrolls number.
- German finance ministry official says there are still a number of issues yet to be resolved before Greece can receive the next aid disbursement.
- Chinese HSBC Manufacturing PMI beats expectations at 49.5 vs. Exp. 49.1, adds to the theory that the Chinese economy could have hit bottom.
As we enter the North American session, equity markets are seen marginally higher, as concerns over the never-ending Greek debt drama are offset by the release of an encouraging data from China. Chinese HSBC Manufacturing PMI printed a fresh 8-month high, while the official Chinese Manufacturing PMI came in line with expectations. In addition to that, a state researcher has said that the countries economy has bottomed and is stabilizing. Meanwhile in Greece, the fact that debt is now seen climbing to 192% in 2014 and an agreement on how to defuse the situation has yet to be found may lead to another speculative attack not only on Greek paper, but also other southern states. As a result, GR/GE 10s spread is seen wider by 30bps, however other peripheral bond yield spreads with respect to the German Bund are tighter. The second half of the session sees the release of the latest weekly jobs report, consumer confidence and the weekly DoE from the US.
Asian equities all made gains overnight, as the Chinese HSBC Manufacturing PMI beat expectations at 49.5 vs. Exp. 49.1, an 8-month high, albeit below the 50.0 mark. The data has added to the theory that China's economy has hit bottom, and a recovery is on the way. As such, the Nikkei 225 closed higher by 0.2% at 8,946, with the Chinese news outweighing the ongoing poor earnings season from Japanese firms; overnight, Panasonic cut their FY forecast and announced they will not pay a dividend for the first time since 1950 (closed lower by 20%). Additionally, Sony reported misses on all key Q2 metrics and cut their FY forecast. In Shanghai, the Composite additionally benefited from local authorities loosening property price regulation, boosting the index to close higher by 1.7%. The Hang Seng Index closed higher by 0.86%, a 2012 closing high for the index.
US President Obama is ahead in the 3 key states of Wisconsin, New Hampshire and Iowa, according to the latest WSJ/NBC poll. (WSJ)
Ahead of today’s ADP Employment Change, which is the first time ADP will release the report using new methodology, here are a few points worth bearing in mind:
- Last month’s reading (Sep) was revised lower from +162.0k to +88.2k using the new compilation.
- The modification to the method the ADP employment change figure is compiled is in order to try and predict more accurately the third release of non-farm payroll.
EU & UK Headlines
A German government official has said Greece will not be a central topic of the G20 meeting in Mexico but will likely be discussed on the sidelines. The official also said there are several open issues preventing the disbursement of Greek aid, with financing issues, debt levels and conditions still up for discussion. The official concluded by saying that a solution is not yet in sight. (Newswires) UK Manufacturing PMI missed expectations in October, with a 47.5 reading vs. Exp. 48.0 (Prev. 48.4, Rev. 48.1). The survey showed the New Orders index falling to 47.7 from 49.9, as manufacturers cut production and shed jobs.
European equities are making steady progress at the midpoint of European trade, with all indices seeing gains. The core bourses are seen as the best performers, as the DAX and EuroStoxx register the firmest gains. The telecommunications and technology sectors are leading the moves higher, with oil & gas suffering, as Royal Dutch Shell report a rough quarter due to lower crude prices. US stock futures trade in mixed territory ahead of the Wall Street open, with all eyes looking ahead to tomorrow's jobs report. In individual equities news, Pfizer reported in-line with expectations, with Q3 Adj. EPS USD 0.53 vs. Exp. USD 0.53 and Q3 revenue of USD 13.98bln vs. Exp. USD 14.66bln. Additionally, the Co. have said they are to buy back up to USD 10bln worth of shares.
GBP is the standout performer in the FX markets this morning with GBP/USD hitting a two week high at 1.6176 and the EUR/GBP cross being offered back towards the 0.8000 level. This is despite the weaker than expected UK Manufacturing PMI data as focus remains on the overnight comments from the BoE deputy governor Bean on QE. The JPY is seen softer across the board as the poor corporate earnings continue in Tokyo and traders are seen to be looking to invest into other Asian currencies as the October manufacturing PMIs for China, India, Taiwan and South Korea were all above expectations. In regards to the Chinese PMI data, even though both metrics showed relative strength markets were comparably unreactive due to the close proximity of the non-farms payrolls report tomorrow. The USD-index is flat heading into the US session but will be one to watch as there is a raft of tier 1 data compressed into a shorter time frame due to Hurricane Sandy.
WTI and Brent crude futures trade mixed ahead of the NYMEX pit open, with the WTI-Brent spread tightening, as all eyes look ahead to the DoE crude oil inventory numbers, where expectations are currently for a further build in inventories of 1800K bbls. Spot gold and silver are also making gains despite the modest USD-strength, as Chinese PMI numbers overnight give further indications of a bottoming out for the Chinese economy. For natural gas, the EIA Natural Gas Storage Change numbers are also expected today.