- Fink đź§
- Posts
- The Opening Belle
The Opening Belle
Risk sentiment has ticked higher to start the week.
Australia's ASX & Japan's Nikkei both up around 1%, and U.S futures well in the green too.
European futures point to a positive open, with the market looking beyond new Covid restrictions for now. Eurostoxx futures +0.4%.
Chinese data overnight: GDP 'disappointed', but retail sales picked up.
Overall, a very positive data set.
GDP missed the forecasts, coming in at 4.9% YoY vs 5.2% forecast.
It is still heading in the right direction, and means the economy has now grown 0.7% so far this year.
Anyway, China's V shape narrative is still intact.
Reuters
The bigger news was the strong bounce in consumption, with September's retail sales improving by 3.3% Y0Y, beating expectations of 1.8% growth.
@trinhnomics
As Trinh notes, improving consumption data in the world's two largest economies can only be a good thing.
Where are we? We are here (or shall I say we were here in September):
China retail sales improving to +3.3%YoY
US retail sales also bouncing to +5.4%YoY!
Not bad. pic.twitter.com/u5eBqUIA08— Trinh (@Trinhnomics) October 19, 2020
The improvement in the restaurant/catering sector (still in decline, but at a much lesser rate) is an encouraging sign too.
It will be a while until we see that again in Europe...
Industrial production sustained recent strength, growing 6.9% in September.
Over in Japan, they gaze longingly at the Chinese data...
Short version. Exports missed forecasts, imports beat forecasts.
Green shoots and all that...
Japan’s exports fell in September at the slowest pace in seven months as U.S.-bound vehicle shipments rose from lows brought about by the COVID-19 pandemic, indicating easing pressure on the world’s third-largest economy.
Exports fell 4.9% in September compared with the same month a year earlier, more than the 2.4% economists forecast in a Reuters poll. Still, the pace followed six months of double-digit decline, including a 14.8% drop in August.
Fewer exports of iron to Taiwan and ships to Panama left September marking the 22nd consecutive month of export decline, the longest run since the 23-month stretch through July 1987.
Still, the slowing decline in exports adds to other signs of gradual economic recovery such as a pickup in factory output.
“Production has recovered substantially, but as that’s mostly a rebound after sharp falls, the recovery pace will probably slow,” likely after year-end, said chief economist Yuichi Kodama at Meiji Yasuda Research Institute.
Moreover, a recovery in exports would likely have limited impact on the size of any further stimulus package given the focus will likely be on helping firms suffering from weak domestic demand, Kodama said.
By destination, shipments to the United States rose 0.7%, the first increase in 14 months, driven by stronger demand for electrical power machinery as well as passenger cars, whose numbers jumped 18%.
Exports to China, Japan’s largest trading partner, rose 14.0%, the sharpest rise since January 2018. Those to Asia as a whole fell 2.0%, their slowest pace of decline since February.
Imports shed 17.2% versus the 21.4% median estimate of economists polled by Reuters, resulting in a trade surplus of 675.0 billion yen ($6.41 billion).
Marcel Thieliant, Japan economist at Capital Economics, said imports of goods and services may return to pre-virus levels until the end of 2022.
“The upshot is that after knocking three percentage points from GDP growth in Q2, net exports will support growth over the coming quarters.”
A couple of great Covid graphics here via the FT and Bruno Macaes
For those who think this is irrelevant because these are just “cases,” below deaths - which always lag cases by 6-8 weeks pic.twitter.com/SmSfxMuINU— Bruno Maçães (@MacaesBruno) October 18, 2020
Looking ahead, there's really not much on the calendar today.
Stimulus talks, OPEC meeting will be the focus, along with any Brexit-based rhetoric.
Plenty of central bankers to keep us entertained too!
08:15 - ECB's de Guindos at the XI Financial Forum12:30 - ECB's Mersch at a MNI Connect Roundtable13:00 - Fed Chair Powell at the IMF13:40 - ECB's Lane at a Monetary Policy Conference 'bridging science & practice'13:40 - ECB President Lagarde 14:00 - Fed's Williams webinar on Partnerships in Building Ethical Norms14:30 - BoE's Broadbent on the Production & Distribution of Cash15:05 - BoE's Cunliffe on Central Banks & Cryptocurrencies16:00 - BoE's Cunliffe IMF Event on Global Roadmap for Improvements16:45 - Fed's Clarida at a Banking Association Event19:20 - Fed's Bostic on 'The Benefits of a Diverse & Inclusive Economy'20:00 - Fed's Harker on a post-COVID recovery the Private Sector Response & Outlook