The very modest increase in US employment announced on Friday postpones the start of the Fed's reduction in securities purchases by at least a few weeks (the so-called Tapering). The novelty, which hits the markets on a day devoid of Wall Street, closed for the Labor Day holiday, favors a positive start for Asian stock markets, driven by Tokyo, now in full pre-election tussle.
China is also doing its bit to revive the stock markets: an expansion of the main Hong Kong index to 60 stocks has been announced. More generous reforms for Macau, the former Portuguese colony more obedient to Beijing, where the vote will take place this week: the economic activities present in the area surrounding the area will be granted important tax subsidies and cross-border commuters will be treated as citizens residing in Macao. The news gave wings to companies located in the southern part of Guangdong, the one bordering the Las Vegas of the East.
NIKKEI AT HIGHEST FOR 31 YEARS, CHINESE STOCK MARKETS ADVANCE
The Nikkei index is on track to close up 1,7%, to a 31-year high. Friday had gained more than 2% (+5,4% for the week).
The MSCI Asia Pacific index, which excludes the Japanese market, is on its week-long session of gains, the longest streak since the beginning of the year.
China's stock exchanges are all positive. Hang Seng of Hong Kong +0,5%, CSI 300 of the Shanghai and Shenzen price lists +1,7%, Taiex of Taipei +0,7%.
The conference of Foxconn, the chip giant, opened this morning in Taipei. It will be an opportunity to take stock of the electric car that the company is developing, also with the contribution of Stellantis.
India is also brilliant. BSE Sensex gains 0,5%, new record. The dollar-rupee cross was little moved, at 73,05. The relative stability that the Indian currency has enjoyed since the beginning of the year, according to UBS, is not destined to last long: at the end of the year the cross should be around 77 (the Swiss bank's target implies a 5% depreciation).
RAW MATERIALS, A NEW PROBLEM FOR COMPANIES
Among the raw materials, the new leap in aluminum should be noted, to the new high price of the last ten years, but still insufficient to feed the demands of the industry. The latest stretch of industrial metal prices is related to yesterday's news from Guinea, one of the major bauxite producers. The colonel in charge of the army's special forces announced on public television that he had arrested the president and suspended the constitution.
OIL HOLDS DOWN, EURO/DOLLAR AT 1,186
Holding back oil: Saudi Arabia has increased its exports to Asia. WTI crude oil down 1%, to 68,5 dollars a barrel.
1,32-year Treasury Notes at 1.825%. Gold at $1,186. Euro dollar down slightly to XNUMX, after six consecutive days of appreciation.
THE ECB TOWARDS MINI-TAPERING
The meeting of the directorate of the ECB will undoubtedly be the key event of the week. After the higher-than-expected rise in inflation, the central bankers of the frugal countries, led by the Bundesbank, are calling for a cut in the purchases of bonds by the ECB to counter the race in prices. The doves reply that the jump in prices is linked to the increase in energy and VAT in Germany. As a compromise, a reduction of the Peep purchase program (from 80 to 60-70 billion a month) can be foreseen, but the confirmation of low rates.
The financial match is linked to the political confrontation within the EU, regarding the confirmation of the Maastricht parameters and the return of the Fiscal Compact. But these are only skirmishes: the match will come alive after the German vote on 26 September and the formation of the new government, far from easy or rapid.
Order data from German industry arriving today. Also on the agenda is the informal Ecofin via videoconference to approve the national resilience plans of Czechia and Ireland.
On the macro front, the 3rd quarter Eurozone GDP reading is to be followed on Thursday. The September Zew index is expected to be released on Tuesday.
AUSTRALIA, TOMORROW THE DECISION ON RATES
Also on Tuesday, the Chinese trade balance is scheduled.
The Australian central bank will meet on Tuesday to decide whether or not to mini-tighten rates, starting with tapering. The last rate hike was eleven years ago. The growth in property market prices suggests an intervention by the Central Bank, but the resumption of infections could convince the institution to postpone the intervention, as happened in New Zealand.
BIDEN DECIDES APPOINTMENTS TO THE FED. POWELL IN THE POWDER
The news of the Eurozone also finds space because the US markets are closed today for the Labor Day holiday. On Friday, the figure surprised the markets negatively: only 235 new jobs against the estimated 750. The result makes the announcement of the Tapering (Central Bank cut back on purchases) at the next Fed meeting on Sept. 22.
But attention is focused on President Biden's choices on the Fed. According to Bloomberg, this week the White House will announce who will be called to lead the central bank from next February. It is possible, but not certain, the confirmation of Jerome Powell, a Republican who however deserves credit for having defended the independence of the Fed in the time of Donald Trump, in addition to the management of the pandemic which guaranteed him the support of Janet Yellen. But the democratic left, starting with Alexandria Ocasio-Cortez, is asking for a drastic change of course, with a president who is less soft on the banks and more attentive to environmental issues. It is likely that Biden will choose to confirm Powell, but support him with a strong deputy, who will have to follow the banking and Wall Street files.
The central bank could buy time by postponing the choice of tapering. A more precise clue will arrive on the evening of 8 September with the publication of the Beige Book.
ITALY IN RECOVERY: THE DEBT BURDEN FALLS TO 2,4%
Good news for the Italian economy: in Cernobbio, Economy Minister Daniele Franco said that GDP will rise by 5,8% at the end of the year, with positive effects on debt and deficit.
The meeting between the Minister of Labor Orlando and the social partners on active policies is scheduled for Wednesday.
THE COLAO PLAN ON THE CLOUD AT THE START
Among the Italian events, the presentation on Tuesday of "Strategia Cloud Italia" stands out, the strategic guidance plan for the implementation and control of the Cloud of the Public Administration. "On the occasion - said Minister Vittorio Colao - we will explain how and because there will be a role for everyone, thanks to the classification policies for data centers, the cloud first rules for the PA and the rules established by the cybersecurity agency".
Among the corporate appointments to be mentioned tomorrow is the six-monthly Ferragamo and the day after that of Tod's.
