Wednesday, October 25, 2017

UK Economy Expands More Than Forecast In Q3 25 October 2017, 17:23

The UK economy expanded more-than-expected in the third quarter led by services, providing room for the Bank of England to hike the interest rate as early as next week. Gross domestic product grew 0.4 percent sequentially in the three months ended September, slightly faster than the 0.3 percent growth seen in the second quarter, preliminary estimate from the Office for National Statistics showed Wednesday. The ONS said following growth of 0.4 percent GDP has grown for 19 consecutive quarters. On a yearly basis, economic growth held steady at 1.5 percent in the third quarter, which was in line with expectations. The production-side breakdown of GDP showed that services remained the largest contributor to GDP growth, with the 0.4 percent quarterly expansion. The main contributor to services growth was the business services and finance sector, which increased by 0.6 percent. After a weak second quarter, manufacturing climbed 1 percent. Overall production as well as farm output also grew 1 percent each. Meanwhile, construction contracted for the second quarter in a row with output shrinking 0.7 percent. GDP figures revealed that the economy re-gained a bit of momentum in the third quarter and have probably sealed the deal on an interest rate hike next week, Ruth Gregory, an economist at Capital Economics, said. James Smith, an ING economist, said the main difference between the second and third quarter was a sizeable contribution from manufacturing. The service sector is still struggling to fire on all cylinders and that has meant that overall growth is still below the 0.6 percent average quarterly GDP increases seen between 2014-16, the economist noted. Smith expects the BoE to increase interest rates next week but the sluggish growth outlook will weigh heavily on the Bank's decision-making process when it comes to further tightening next year. The BoE is set to publish its next Inflation Report with the MPC decision on November 2. Another report from the ONS showed that the index of services climbed 0.2 percent in August from July. In the three months to August, services output rose 0.4 percent from the previous quarter and 1.7 percent from last year. 

Canadian Dollar Falls Against Majors 25 October 2017, 17:24

The Canadian dollar dropped against the other major currencies in the European session on Wednesday. The loonie retreated to 89.72 against the yen and 0.9810 against the aussie, from its early high of 90.01 and a weekly high of 0.9771, respectively. The loonie fell to more than a 2-month low of 1.2723 against the greenback and near a 2-month low of 1.4983 against the euro, off its previous highs of 1.2669 and 1.4895, respectively. If the loonie slides further, it may find support around 88.00 against the yen, 1.285 against the greenback, 0.99 against the aussie and 1.51 against the euro. 

Swiss Investor Confidence Rises For Second Month 25 October 2017, 17:30

Switzerland's investor confidence improved for a second straight month in October to its second highest level since the start of 2014, survey data from Credit Suisse and the CFA Society Switzerland showed Wednesday. The Credit Suisse CFA Society Switzerland Indicator, which measures the expectations of financial analysts for the Swiss economy in the next six months, climbed for the second time in a row to reach 32 points, the second highest level since January 2014. Previously, the index was higher in July at 34.7 points. The survey showed that 36 percent of those surveyed expect a further improvement and 60 percent saw no change in the economic situation in Switzerland in the next six months. The current situation of the Swiss economy was also rated positively by 48 percent of the survey participants, the highest percentage since July 2014. Further, the report said the financial analysts are expecting a further depreciation of the CHF versus the EUR and USD and increasing equity prices in Switzerland. The survey was conducted between October 9 and 19.

Tuesday, October 24, 2017

Pound Drops As BOE's Cunliffe Wary Over Nov. Rate Hike 24 October 2017, 18:45

The pound weakened against its major rivals in the European session on Tuesday, as the Bank of England Deputy Governor Sir Jon Cunliffe remarked that a rate hike in November remained an "open question". Speaking to the Western Mail, the BoE policy maker said that while the economic growth has slowed, real wages have declined due to an increase in inflation since the Brexit referendum. While rates are certainly to be higher in three years time, the exact timing of a rate hike is an open question, he told. His comments added to uncertainty about the BoE rate hike in November. Speaking to the House of Commons, UK Chancellor of the Exchequer Philip Hammond said that the U.K. government is committed to trim the budget deficit in a "measured and balanced way." "Increasing activity in the construction sector is a very good way of creating jobs but ... at 4.3 percent, our economy is approaching full employment, the output gap is extremely small," he added. The pound dropped to a session's low of 0.8928 against the euro, following an advance to 0.8894 at 12:45 am ET. If the pound extends decline, 0.92 is possibly seen as its next support level. Flash survey data from IHS Markit showed that the euro area private sector expanded strongly in October but the pace of growth slowed from September. The flash composite output index fell more-than-expected to 55.9 in October from 56.7 a month ago. The score was forecast to drop marginally to 56.5. The pound edged down to 1.3166 against the greenback, from a high of 1.3227 hit at 11:30 pm ET. The next possible support for the pound is seen around the 1.30 area. The pound pared gains to 149.71 against the yen and 1.2988 against the franc, from its early highs of 150.08 and 1.3028, respectively and held steady thereafter. The pound closed Monday's trading at 149.69 against the yen and 1.2998 against the franc. Looking ahead, Markit's preliminary U.S. manufacturing PMI for October is set for release in the New York session. 

OI: Company Shares Fall More Than 6% After Vote On Recovery Plan Postponed 24 October 2017, 04:30

Brazilian telecommunications company Oi's preferred shares are falling by more than 6% on news that a meeting of creditors scheduled for Monday was postponed once again. Also, Oi stock's were affected by reports that the telecom sector regulator in Brazil (ANATEL) decided not to engage in a deal to convert the company's fines in investments. Last Friday, a Brazilian court upheld the request by Oi's creditor banks and bondholders to postpone a vote on the company's judicial recovery plan until November 6th. According to the creditors, it would be premature to hold the meeting once there is the intention to evolve in the talks on feasible alternatives. The government has also been seeking more time to find a solution that may please public entities and other creditors and shareholders, in the face of conflicts over the company's plan. According to Coinvalores brokerage analysts, "the new delay makes clear the opposition of Oi's creditors to the conditions of the new plan." According to the analysts, Oi's papers should react negatively in the short term. 

COLOMBIA: Colcap Drops 0.32% On Fears Of Possible U.S. Rate Hike 24 October 2017, 04:56

Colcap, the main index of the Colombian Stock Exchange, fell 0.32% Monday, closing at 1,460.36 amid fears over the consequences of an expected interest rate hike in the United States. Ramses Pestanapalmett, an analyst at Ultraserfinco, said that a report presented by Morgan Stanley points out to Colombia as the country most at risk of negative consequences of an interest rate hike by the U.S. Federal Reserve bank. Meanwhile, the state-owned oil company Ecopetrol rose 0.35% after signing a memorandum with Malaysia's Petronas to negotiate trade agreements that allow both companies to develop exploration and production projects in the Americas. Besides, Ecopetrol, the shares of Nutresa (+0.52%), Canacol (+0.43%), ?xito (+0.38%), and Celsia (+0.11%) rose, while ETB (-2.56%), Sura (-1.50%), Grupo Aval (-1.12%), Cemargos (-1.03%), Davivienda (-0.62%), Banco de Bogot? (-0.41%), Conconcreto (-0.40%), Avianca (-0.18%), and Preferencial Bancolombia (-0.12%) fell. Meanwhile, the locally traded U.S. dollar closed the day at 2,952 Colombian pesos, marking a 0.49% rise, due to the decline of the euro. Agust?n Vera, an analyst at Global Securities, said that investors continue to punish the common European currency for political uncertainty in Catalonia. 

VENEZUELA: CNE Did Not Receive Formal Challenge To Electoral Process 24 October 2017, 06:12

Venezuela's National Electoral Council (CNE) director Tania D 'Amelio said that she did not receive any formal challenge from the opposition to the October 15 regional elections. Ruling candidates won in 18 out of 23 provinces. The opposition to the President Nicol?s Maduro claims that there was fraud in the electoral results in the province of Bol?var, but still have not filed any formal challenge to the result. "I urge political organizations, especially in the opposition, which are the ones who are saying that there is fraud, that formally challenges the process in the CNE, which is the first administrative instance of appeal," she said. "If you have doubts about the process and you do not agree, you must challenge." 

BRAZIL: Caution With Politics Dictates Stock Market Tone 24 October 2017, 06:29

Ibovespa, the benchmark stock index in Brazil, fell 1.27% Monday, closing at 75,413.12 while investors await the result of the House of Representatives vote on the criminal complaint against Michel Temer. Analysts consider that the vote not only decides the future of the Brazilian President, but will serve as a "thermometer" regarding the pension reform future in the Congress. "The market will wait for Wednesday, and it is looking at how many votes the government has and how much it will represent in a future deal on pension reform. There are already foreign investors working with the possibility that there will not be time for the Pension Fund to be voted on," said Jos? Costa, an economist at Codepe Corretora. According to Vitor Suzaki, an analyst at Lerosa Investimentos, there was a risk aversion mood abroad today, but caution about the vote on the complaint against Temer weighed even more in the Ibovespa. The wait for the decision of the Central Bank's Monetary Policy Committee (Copom), that will meet tomorrow and Wednesday, also made price Monday, holding the index in the negative field. The cautious mood, say Suzaki and Costa, is expected to get even stronger Tuesday, which could lead the Ibovespa down. The locally traded U.S. dollar accelerated gains near the closing to rise 1.31%, ending at R$ 3.2320. The third greenback's appreciation in a row against the Brazilian real reflects the greater concern with the foreign scene and the caution among investors regarding the vote on the second criminal complaint against President Michel Temer. 

ARGENTINA: Merval Climbs 3.06% After Ruling Coalition Election Triumph 24 October 2017, 06:40

Merval, the main index of the Buenos Aires Stock Exchange, surged 3.06% Monday, closing at 27,806.16 after the ruling coalition victory in Sunday's legislative election. The result was widely expected by investors. "With this result, Cambiemos [ruling coalition] now consolidates as the first political force at the national level, hence the euphoria that was experienced on Monday in the local equity segment," said Eduardo Fern?ndez, an analyst at Rava Burs?til. Also, the oil companies posted strong highs after the increase in fuel prices announced today. YPF gained 5.11%, while Pampa rose 2.79%. The shares of Macro (+8.02%), Cresud (+6.36%), Telecom (+6.33%), and Comercial del Plata (+6.30%) rose the most in Monday's session. Meanwhile, the locally traded U.S. dollar fell 0.11%, closing at 17.41 Argentinean pesos, after the expected victory of the ruling coalition in Sunday's legislative elections. 

Japan Manufacturing PMI Slows In October - Nikkei 24 October 2017, 06:45

The manufacturing sector in Japan continued to expand in October, albeit at a slightly slower pace, the latest survey from Nikkei revealed on Tuesday with a manufacturing PMI score of 52.5. That's down from 52.9 in September, although it remains above the boom-or-bust line of 50 that separates expansion from contraction. Individually, output, new orders, new export orders and quantity of purchases all increased but at a slower pace. Employment, backlogs and output prices all increased at a faster rate. Business confidence fell to an 11-month low.  

Australia's Consumer Confidence Improves 24 October 2017, 09:59

Australia's consumer confidence rebounded during the week ended October 22, a weekly survey compiled by the ANZ bank and Roy Morgan Research showed Tuesday. The consumer confidence index rose to 113.3 from 112.4 in the preceding week. The gain was driven by improvements in expectations for the near- and long-term economic outlook. The index measuring 'time to buy a major household item' remained unchanged at 129. Inflation expectations remained stable, at 4.5 percent for the third consecutive week. "Continued improvement in the labor market and an eventual acceleration in wage growth is likely the key to a clear uptrend in consumer confidence," ANZ'S head of Australian economics, David Plank, said. 

NZ Dollar Declines Against Majors 24 October 2017, 12:09

The New Zealand dollar slipped against its most major counterparts in late Asian deals on Tuesday. The kiwi dropped to a 5-month low of 0.6926 against the greenback, off early 4-day high of 0.7004. The kiwi hit a 1-1/2-month low of 78.57 against the yen and a 1-1/2-year low of 1.6970 against the euro, from its early high of 79.36 and a 5-day high of 1.6793, respectively. The next possible support for the kiwi is seen around 0.68 against the greenback, 0.77 against the yen and 0.71 against the euro.