Opening Belle

September 15, 2020 • Estimated Reading Time: 6 minutes

Risk sentiment remained broadly positive overnight, but yesterday's enthusiasm has definitely been dampened.   Japan's Nikkei & TOPIX indices both fell at the open, but subsequently pared losses.

U.S. Futures slightly up

European markets set to open pretty much unchanged...

 European Opening Calls:#FTSE 6036 +0.16%#DAX 13197 +0.02%#CAC 5051 -0.02%#AEX 552 -0.06%#MIB 19806 +0.06%#IBEX 6957 +0.08%#OMX 1804 +0.07%#STOXX 3313 -0.10%#IGOpeningCall— IGSquawk (@IGSquawk) September 15, 2020 

Overnight news and data

The China recovery continues.

China’s industrial output accelerated the most in eight months in August, while retail sales grew for the first time this year, suggesting the economic recovery is gathering pace as demand starts to improve more broadly from the coronavirus crisis.

Industrial output growth quickened to 5.6% in August from a year earlier, the fastest gain in eight months, data from the National Statistics Bureau showed on Tuesday. Analysts polled by Reuters had expected a 5.1% rise from 4.8% in July.

Retail sales also rose 0.5% on-year, snapping a seven-month downturn and beating analysts’ forecast for zero growth. In July, sales dropped 1.1%.

Trinh with some interesting observations;

 You can see the difference between IP & retail sales growth here in this chart of PPI & exports.

PPI -2%YoY & exports +9.5%YoY. Imports of course are weak (makes sense as u can see weak retail sales).

The rise of IP = rise of exports while imports weak (domestic demand weak). pic.twitter.com/5YplxCSR9X— Trinh (@Trinhnomics) September 15, 2020 

 So my thesis was correct that the great lock-down is over & that people are abandoning such draconian measure. Jakarta measures expire in two weeks & already they are much softer than before.

Anyway, China August data shows the same: production greater than consumption. pic.twitter.com/moQOwwASWU— Trinh (@Trinhnomics) September 15, 2020 

The Yuan just keeps on strengthening.  

 Offshore #yuan #CNH strengthens more than 300 pips to break through 6.78 per dollar mark for the first time since May 2019. pic.twitter.com/AE4fWmIhMy— YUAN TALKS (@YuanTalks) September 15, 2020 

Down under, the RBA minutes struck a market-positive tone.

The AUD strongly rallied after minutes were released. The minutes noted that a weaker currency would support the economic recovery.

Talking down currencies used to work. We are in a brand new era where central bank actions are required to move markets.   Nothing new or unexpected in there. No further rate cuts.Rate rises a long way off. Continued commitmment to support the recovery.

The House Price Index fell by 1.8% in Q2 (but still 6.2% higher over the year) Commsec have a good breakdown on that here.

Looking ahead, this morning we have UK employment data, final inflation readings for France & Italy,  plus the Zew economic sentiment index.This afternoon's U.S. data will likely have minimal impact ahead of the FOMC tomorrow.

And if you want to get your head around the retail options craze, this is bound to be a good listen!

 The new Odd Lots is out! And I think it's the best explanation you'll get of the impact that Robinhood options traders have had on the market this year.@tracyalloway and I talked to @bennpeifert, who can explain this stuff like nobody else https://t.co/WxXEVG0ELW— Joe Weisenthal (@TheStalwart) September 14, 2020