20171020-大华银行-Markets_Overview_4页_282kb

Global Economics & Markets Research Summary (20 October 2017)

Core Content

This report provides an overview of global economic and financial market movements as of 20 October 2017, highlighting key economic indicators, currency trends, equity performance, bond yields, and upcoming events that could influence market dynamics.

Main Highlights

Economic News & Data

• US Job Market: Initial jobless claims fell to 222,000, the lowest since March 1973, significantly below the expected 240,000. Continuing claims also dropped, indicating a strong labor market.
• UK Retail Sales: September retail sales declined more than expected, with a 0.8% volume drop, signaling continued pressure on household budgets due to inflation and the post-Brexit pound weakness.
• China Economic Growth: China's GDP growth for the third quarter of 2017 was reported at 6.8%, matching Bloomberg estimates. Industrial production and retail sales both increased slightly, at 6.6% and 10.3% year-on-year respectively.
• Malaysia Inflation: Headline inflation accelerated to 4.3% in September, up from 3.7% in August, driven by higher fuel and food prices.
• Thailand Foreign Reserves: Expected to remain close to record high levels, around $200 billion.
• Catalonia Crisis: Escalated tensions affected European markets, particularly Spanish equities, which declined 0.74% on the day.

FX Market Trends

• NZD: The New Zealand Dollar dropped nearly 2% against the USD, its largest decline in nearly a year, following the Labour Party's surprise election victory.
• USD/JPY: Briefly hit a 13-day high but fell due to equity market declines, ending at 112.30.
• EUR/USD: Reached a six-day high of 1.1858 after fluctuating throughout the day.
• GBP: Continued to weaken, failing to hold above 1.3200, with EUR/GBP testing 0.9000.
• Asian Currencies: Generally range-bound, with the Chinese yuan outperforming the region, rising 0.2% to 6.6274/USD.
• SGD: Remained range-bound between 1.3555 and 1.3595, closing at 1.3566. The S$NEER index turned lower, now at about 1.1% above the midpoint.
• THB & MYR: Finished marginally higher at 33.14 and 4.2242 per dollar respectively.

Equity Market Performance

• US Markets: The Dow Jones closed at a record high, up 0.02%, while the S&P 500 rose 0.03%. The Nasdaq composite fell 0.3%.
• European Markets: Closed lower, with the Spanish IBEX down 0.74% due to the Catalonia crisis and mixed earnings results.
• Asian Markets: The Tokyo Nikkei 225 rose 0.4%, while the London FTSE 100 and Frankfurt DAX fell slightly.

US Treasuries

• Yields: US Treasury yields fell, with the 2-year yield retreating from a near nine-year peak. The government sold $5 billion of 30-year TIPS to solid demand.

Commodities

• Gold: Prices touched a one-week low but rebounded, remaining vulnerable to further declines.
• Oil: Prices slipped due to higher-than-expected US product inventories and profit-taking, though Middle East tensions kept some support in the market.

Key Information

Upcoming Events

• UK: September PSNB and October CBI industrial trends are due.
• US: Loretta Mester and Janet Yellen will speak on monetary policy and global regulation. US existing home sales for September are also expected.
• Canada: September CPI and retail sales are to be released.
• New Zealand: Further policy details from government negotiations are anticipated.
• China: The Communist Party Congress continues, with focus on reforms for state-owned companies and changes to the party constitution.

Interest Rates

• USD Fed Funds Rate: 1.00%, with the next meeting on 1 November.
• EUR Refinancing Rate: 0.00%, next meeting on 26 October.
• GBP Repo Rate: 0.25%, next meeting on 2 November.
• AUD Official Cash Rate: 1.50%, next meeting on 7 November.
• NZD Official Cash Rate: 1.75%, next meeting on 9 November.
• MYR O/N Policy Rate: 3.00%, next meeting on 9 November.
• IDR 7-Day Repo Rate: 4.25%, next meeting on 19 October.
• THB 1-Day Repo Rate: 1.50%, next meeting on 8 November.
• PHP O/N Reverse Repo: 3.00%, next meeting on 9 November.
• KRW Base Rate: 1.25%, next meeting on 19 October.

Market Holidays/Events

• TH (Thailand): Chulalongkorn Day on 23 October, King's Birthday on 5 December, Constitution Day on 11 December.
• NZ (New Zealand): Labour Day on 23 October.
• PH (Philippines): Special Holiday on 21 October, All Saints Day on 1 November, Bonifacio Day on 30 November.
• JP (Japan): Culture Day on 3 November.
• US/JP: Thanksgiving on 23 November.
• MY (Malaysia): Birthday of Prophet Muhammad on 1 December.
• ID (Indonesia): Maulid Nabi Muham on 1 December.

Summary of Key Indicators

Conclusion

The report highlights a mix of economic data and market reactions across major economies. The US labor market showed resilience, while the UK and China faced mixed economic signals. Currency markets were influenced by political developments and central bank policies, with the NZD experiencing significant pressure. Equity markets remained volatile, with European indices underperforming due to the Catalonia crisis. Commodities like gold and oil showed mixed trends, and bond yields declined, indicating some safe-haven demand. Upcoming events and data releases are expected to shape future market dynamics.