Weekly Trading Update
30.10.15 Friday Morning
US
Arguably most of the major news has come out of the US, with the Dow gradually creeping above 17800 as it eyes that elusive 18000 level perhaps in spite of, instead due to, the week’s events. Misses in core durable goods orders, the services PMI and the country’s consumer confidence all set up a FOMC statement on Wednesday that was meant to be of little consequence. And whilst the Fed did indeed keep interest rates unchanged the statement Yellen and co. produced was far less cautious than expected, explicitly putting a December lift-off on the table by referencing considered action ‘at the next meeting’.
With that in mind Thursday’s advance GDP gained a bit more gravitas (not that it wasn’t important enough already); a rather sharp drop-off, from 3.9% at an annualised rate in Q2 to a mere 1.5% in Q3 (below analysts’ expectations) looked disastrous on the surface. However, the main growth-cutter was a less-worrying slide in businesses’ inventory-building, that factor alone wiping 1.4% off of the country’s Q3 figure. It also still leaves the country’s average growth at 2% across the year so far, a solid number that is unlikely to cause any drastic change in sentiment in the central bank.
Things could (but likely won’t) become a bit clearer next week; manufacturing and services PMIs, factory orders, jobless claims and, importantly, a Janet Yellen testimony in front of the House Financial Services Committee on Wednesday all provide a meaty appetiser for Friday’s non-farm main course.
UK
Barring the preliminary third quarter GDP figure on Tuesday, slipping from 0.7% in Q1 and Q2 to a disappointing 0.5%, the FTSE’s week has been dominated by UK earnings releases. Wednesday saw the index boosted by GlaxoSmithKline’s results and the approval of BT’s (which announced some decent figures on Thursday) merger with EE by the CMA.
Thursday, however, saw the FTSE hampered by both its volatile commodity stocks (with Shell joining BP in posting some unattractive third quarter figures) and its banking sector (with Barclays the responsible party). A similar situation on Friday, with Shell and Barclays replaced by BG and RBS, continued to cap the index at around the 6400 mark, a level it has struggled to break beyond for the entirety of October.
Like the rest of the West the UK sees its manufacturing and services PMIs next week, with FTSE investors likely eyeing the Chinese results more than those in-house due to the often commodity-shaking effects of data from the world’s second largest economy. Then the UK sees the second of the BoE’s ‘Super Thursdays’, something that could have important ramifications for cable in what would normally be a non-farm dominated week.
Eurozone
It was a quieter week for the Eurozone, especially following the classic Draghi-injection the region received last Wednesday. A better than forecast German Ifo business climate figure got things off to a decent start, whilst Volkswagen’s results (the car-giant giant being the main worry surrounding that business climate figure) managing to (sort of) please investors despite a cavalcade of ugly figures.
Deutsche Bank, on the other hand, was less lucky (see below), and helped drag the DAX into the dirt on Thursday. However, even with another wave of disappointing data on Friday (this time in the form of German retail sales and Spanish GDP, with region-wide inflation and unemployment figures still to come) the DAX managed to maintain its 10850 level whilst the CAC edged closer to reclaiming the 5000 mark.
Next week may be a bit busier for the region, if only just; the latest manufacturing and services PMIs come out on Monday and Wednesday respectively, with a helping German industrial production and French trade balance data sprinkled on top.
Stock of the week: Deutsche Bank AG
Initially investors had coped with Thursday’s confirmation of Deutsche Bank’s previously announced €6 billion third quarter loss fairly well, even managing to swallow the suspension of its dividend for 2 years. However, the revelation that the bank would be cutting 9000 full-time jobs, 4000 of which in Germany, alongside closing its operations in Argentina, Chile, Mexico, Uruguay, Peru, Denmark, Finland, Norway, Malta and New Zealand was a step too far, sending the stock over 8% lower in the aftermath to a 2 week low of €25.25.
Open (Monday)
6441.6
Close (Thursday)
6393.3
Change
-0.75%
High
6454.6
Low
6356.6
Open (Monday)
17610
Close (Thursday)
17775
Change
+0.94%
High
17789
Low
17542.5
Open (Monday)
1.53155
Close (Thursday)
1.5321
Change
+0.04%
High
1.5381
Low
1.52426
Open (Monday)
1162.8
Close (Thursday)
1147
Change
-1.36%
High
1183.2
Low
1144.4
(Source: IT-Finance.com 30/10/2015)
Economic Diary, 1st to 6th November 2015
Sunday 1st November
1.00am – CNY Manufacturing PMI
1.00am – CNY Non-Manufacturing PMI
Monday 2nd November
1.45am – CNY Caixin Manufacturing PMI
8.15am – EUR Spanish Manufacturing PMI
8.45am – EUR Italian Manufacturing PMI
8.50am – EUR French Final Manufacturing PMI
8.55am – EUR German Final Manufacturing PMI
9.00am – EUR Final Manufacturing PMI
9.30am – GBP Manufacturing PMI
2.45pm – USD Final Manufacturing PMI
3.00pm – USD ISM Manufacturing PMI
Tuesday 3rd November
8.00am – EUR Spanish Unemployment Change
9.30am – GBP Construction PMI
3.00pm – USD Factory Orders m/m
Wednesday 4th November
1.45am – CNY Caixin Services PMI
8.15am – EUR Spanish Services PMI
8.45am – EUR Italian Services PMI
8.50am – EUR French Final Services PMI
8.55am – EUR German Final Services PMI
9.00am – EUR Final Services PMI
9.30am – GBP Services PMI
1.15pm – USD ADP Non-Farm Employment Change
2.45pm – USD Final Services PMI
3.00pm – USD ISM Non-Services PMI
3.00pm – USD Fed Chair Yellen Testifies
3.30pm – USD Crude Oil Inventories
Thursday 5th November
7.00am – EUR German Factory Orders m/m
9.00am – EUR ECB Economic Bulletin
9.10am – EUR Retail PMI
10.00am – EUR EU Economic Forecasts
10.00am – EUR Retail Sales m/m
12.00pm – GBP BoE Inflation Report
12.00pm – GBP MPC Official Bank Rate Votes
12.00pm – GBP Monetary Policy Summary
12.00pm – GBP Official Bank Rate
12.45pm – GBP BoE Governor Carney Speaks
1.30pm – USD Unemployment Claims
1.30pm – USD Prelim Non-Farm Productivity q/q
1.30pm – USD Prelim Unit Labor Costs q/q
Friday 6th November
7.00am – EUR German Industrial Production m/m
7.45am – EUR French Trade Balance
9.30am – GBP Manufacturing Production m/m
9.30am – GBP Industrial Production m/m
9.30am – GBP Trade Balance
1.30pm – USD Non-Farm Employment Change
1.30pm – USD Unemployment Rate
1.30pm – USD Average Hourly Earnings m/m
3.00pm – USD NIESR GDP Estimate
Earnings releases, 2nd to 6th November 2015
Monday 2nd November
HSBC Holdings PLC – Q3 2015 Earnings Release
Tuesday 3rd November
Kellogg Co – Q3 2015 Earnings Release
Associated British Foods PLC – Full Year 2015 Earnings Release
Standard Chartered PLC – Q3 2015 Earnings Release
Wednesday 4th November
Allergan PLC – Q3 2015 Earnings Release
Facebook Inc – Q3 2015 Earnings Release
Vedanta Resources PLC – Interim 2016 Earnings Release
Stagecoach Group PLC – Trading Update
Marks and Spencer Group PLC – Half Year 2015/16 Earnings Release
Persimmon PLC – Q3 2015 Trading Statement
Thursday 5th November
AstraZeneca PLC – Q3 2015 Earnings Release
Cable & Wireless Communications PLC – Half Year 2016 Earnings Release
Tate & Lyle PLC – Half Year 2016 Earnings Release
Walt Disney Co – Q3 2015 Earnings Release
Friday 6th November
Schroders PLC – Q3 2015 Interim Management Statement
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