E Markets: Resolution?

What Happened?

  • Australia October NAB business conditions drop to 12 from 14 – weaker than 14 expected– while confidence drops to 4 from 6 – weaker than 8 expected and new lows for 2018. “Although conditions have eased since earlier in 2018, and have been a little volatile over recent months, business conditions remain well above average,” NAB chief economist Alan Oster said. The biggest drop was in the sub-index for employment falling to 7 from 11 while forward orders remained steady at 3 as did inventories at 1.  
  • German October final HICP unrevised at 0.1% m/m, 2.4% y/y after 0.4% m/m, 2.2% y/y – as expected. The National CPI also unrevised at 0.2% m/m, 2.5% y/y after 0.1% m/m, 2.2% y/y. 
  • French 3Q private payrolls rise 0.2% q/q, 1.1% y/y after 0.1% q/q – less than the 0.3% q/q expected. There were a net 30,200 jobs created after 22,400. Construction rose 0.5% after 0.4% q/q, market services rose 0.2% unchanged. 

  • China October M2 8% from 8.3% - less than the 8.4% expected. The new loans CNY697bn after CNY1.38trn – less than the CNY826bn expected. The total social finance slows to CNY728.8bn after CNY2.21trn - also less than the CNY2.30trn expected. Total loan growth slows to 13.1% from 1.32%. 

  • UK October claimant count rose 20,200 after 23,200 – more than the 4000 expected. The claimant unemployment rate rose to 2.7% from 2.6% but the ONS noted that universal credit rollout makes this data more volatile. The ILO unemployment rate 3M September rose to 4.1% from 4% - also worse than the 4% expected with employment up 23,000 to 32.41mn in 3Q while unemployment rose 21,000 to 1.38mn. The average earnings rose 3% from 2.7% for the 3Q y/y – as expected – while the earnings ex-bonus rose 3.2% after 3.1% – better than the 3.1% expected. 

  • German November ZEW economic sentiment improves to -24.1 after -24.7 – better than the -25.0 expected.  Despite the improvement, the index remains well below the +22.7 long-term average. Also, German Current Conditions drops to 58.2 from 70.1 – worse than the 65 forecast. The Eurozone economic sentiment drops to -22 from -19.4 – worse than the -20 expected. “The figures for industrial production, retail sales and foreign trade in Germany all point towards a weak development of the German economy in the third quarter. This is reflected by the fact that the assessment of the current situation has experienced a decline. The expectations of the survey participants for the coming six months do not show any improvement. This means that, at the moment, they do not expect to see a speedy recovery of the currently weak development of the economy,” noted ZEW President Wambach. 

Market Recap:

Equities: The S&P500 futures are up 0.4% after losing 1.97% yesterday. The Stoxx Europe 600 is up 0.3% while the MSCI Asia Pacific was lower – lead by Japan but moderated by China gains. The tech focus shifted after trade talk headlines. The MSCI all-country World index dips 0.2% to 2-week lows. 

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