Asian indexes are in the green this morning, the Shenzhen Composite leading the way with a 1.27% increase and the Hang Seng straddling the 0-mark as schoolchildren carry on the Hong Kong protests. Markets are generally optimistic, as global bankers are expected to stimulate slowing economies. China’s trade surplus in August narrowed again, this time by $10 bn to $34.84 bn as imports contracted by 5.6% and exports by 1. In Japan, Q2 GDP last night was downgraded to 0.3%.
In a rare surprise, Germany’s seasonally adjusted trade balance in July came in at €20.2B this morning, rather than dropping a billion, as expected. The Euro jumped 5 pips on the announcement. Europe’s GDP also surprised to the upside on Friday, reading at 1.2% – a tenth higher than expected. Indexes last week closed mainly in the green on expectations for an ECB rate cut later this week, which is at present pressuring the Euro down. France’s trade deficit in July narrowed to €-4.607 bn, while industrial production in Germany surprised again by contracting another 0.6% – half the month before. House prices in the UK rose by 0.3% in August MoM, while PM Johnson said last night he has a plan against those trying to legally thwart his no-deal Brexit. Meanwhile, ahead of his meeting today with his Irish counterpart Leo Varadka, the latter disclosed he would agree to an Ireland-only backstop.
The USD lost 20 pips on Friday as August’s nonfarm payrolls disappointed at 130K – a clear indication of a slowing economy. Hourly earnings fell, but not as much as expected by 3.2% YoY and the participation rate added 2 ticks to 63.2%. Canada’s unemployment rate remained a steady 5.7% in August as the month’s seasonally adjusted PMI rose impressively by 6 points to 60.6.
Oil on Friday once again broke through the $57 mark as Saudi Arabia signals the extension of production cuts and Baker Hughes discloses a further 4-rig decline in active oil wells in the US. On Sunday, US officials reiterated that they would sanction any country that purchases Iranian oil or “conducts business with Iran’s revolutionary guards.”
Also in the Gulf, Saudi Arabia’s Energy Minister, Khalid al-Falih has been replaced by Saudi King Salman’s son, Prince Abdulaziz bin Salman, the half-brother of Prince Mohammed bin Salman who was last year implicated in the murder of US-journalist Jamal Khashoggi in Turkey by members of Saudi secret forces. Meanwhile, JPMorgan Chase is expected to lead the Aramco IPO next year. In China, following the departure of Cathay Pacific’s Chairman last week on the heels of its CEO’s resignation and that of several employees, the government-controlled Air China has said it has no plans to take over the privately held Hong Kong airliner.
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|08:30 AM GMT – UK||Manufacturing Production, Industrial Production, Index of Services, Trade Balance & Gross Domestic Product (Jul). Also today, NIESR GDP Estimate (Aug) and Parliamentary Vote on Brexit|
|08:30 AM GMT – EU||Sentix Investor Confidence (Sep)|
|19:00 PM GMT – US||Consumer Credit Change (Jul)|
|22:45 OM GMT – NZ||Credit Card Spending & Retail Sales (Aug)|
|01:30 AM GMT (+1) – China||Consumer & Producer Price Indexes (Aug)|
|01:30 AM GMT (+1) – Australia||Australia Bank’s Business Confidence & Conditions(Aug)|