Oil is falling, victim of the pandemic that is affecting the economy, especially in Europe. The Chinese Dragon soars to new heights, supported by the even faster and more robust than expected recovery of the recovery. Finally, US uncertainties complete the picture at the start of a hot week: the two candidates for the White House produce their last effort, the Federal Reserve is on alert. The only certain datum is the confirmation of the primacy of the East, the new magnet for hot capitals. The excellent data coming from the Caixin index, which measures the economic situation with an eye to the private sector, jumped to 53,6 points, the highest since January 2011. This is the sixth increase this morning. in a row for the Asian giant, which by the way coincides with the launch of the census.
THE DRAGON ALSO PUSHES TOKYO AND KOREA
The boom climate has pushed up the markets, already in fibrillation. Chinese indices are up: Hong Kong +1%; continues the rise of Shanghai and Shenzhen. The rally also affected the other price lists, galvanized by Beijing's purchases: Tokyo's Nikkei stands out as well as Seoul's Kospi (+1,3%).
The Indian Stock Exchange is also restarting. The PMI manufacturing index rose to its highest level since May 2010, reaching the third consecutive month beyond the threshold that separates contraction from expansion. The latest data also show a recovery of foreign investment in Indian stocks. The problem is that there is a shortage of containers because exports run much faster than imports.
FT: EUROPEAN GDP -2,3% IN THE FOURTH QUARTER
Optimism disappears when one looks at Western stock exchanges, especially in Europe at the mercy of Covid -19. According to the predictions of the panel of experts of the Financial Times, the eurozone economy, after the leap in the third quarter (+12,7%), should register a drop of 2,3% in the last quarter, equal to 68 billion euro. The euro to pound exchange rate hit 0,901, up 0,2% after a weekly decline of more than 1%.
BREXIT, THE AGREEMENT IS NEAR. AND THE BOE THINKS ABOUT A NEW QE
Bloomberg reports that the negotiations on the divorce of Great Britain from the European Union would have reached an agreement in principle on fishing in the English Channel, an economically insignificant but very hot topic from a political point of view. The Bank of England meets on Thursday, which will have to face the consequences of the new lockdown: new measures to avoid deflation are expected. Some expect the bank to expand quantitative easing to between £50bn and £150bn.
ELECTIONS, WALL STREET FEARS THE NEAR DRAW
The attention of the markets is focused on US elections of tomorrow. According to observers, the drop in the US markets in the last week (the S&P index -5,3% in the last five sessions) reflects the fear that a clear result will not come out of the polls, proof of disputes. In short, whether Trump or Biden wins, for Wall Street the important thing is to be able to immediately proclaim “the winner is…”.
In general, history teaches that Democratic presidencies have done better at actions than Republican ones. According to the bank's calculation, since 1952 the average annual return has been 10,6% in the first case and 5,2% in the second. What could significantly change will be the composition of the shares that could benefit from a Biden presidency: inside green energy, infrastructure, the education sector and traditional manufacturing, outside polluting industries and finance, while tech seems have already run a lot.
PMI DATA COMING SOON. BREXIT CLOSER
The board of the Federal Reserve will be held on Thursday, when perhaps the outcome of the battle for the Capitol has not yet been decided. The most powerful central bank on the planet will be able to make an initial analysis of the situation and, if necessary, intervene to put out speculative fires: the expansive policy together with low rates will certainly be confirmed.
The Central Bank of Australia is also expected to cut rates this week.
THE BRENT SLIDES TO THE MINIMUM SINCE MAY
The new oil landslide, victim of the slowdown in the economic situation, will be felt on the stock lists. Brent fell by 1,5% to 36,7 dollars a barrel after hitting a low of 35,74 dollars in Asia: last week North Sea crude lost 10,3%, the worst result since April. The president of the National Oil Company of Libya, Mustafa Senalla, said daily production had reached 800.000 barrels per day, ahead of a target of 1,3 million in early 2021.
ANOTHER MANEUVER AT THE START. A NEW FUTURA BTP IS READY
In Italy, the executive has been working since this morning on the text of the maneuver that must be sent to Parliament. A new passage of the budget law in the Council of Ministers is possible, for the final launch after approval, subject to agreements last week.
On Friday evening, the Treasury announced the characteristics of the second issue of the BTP Futura, the government bond dedicated exclusively to retail savers, which will be placed from Monday 9 November to Friday 13 November 2020. The bond will have a maturity of 8 years and will a loyalty bonus equal to 1% of the invested capital, which may increase up to a maximum of 3% of the subscribed amount, based on the average annual growth rate of Italy's nominal GDP recorded by Istat.
ITALY RATING, MOODY'S EXAMINATION ON FRIDAY
The week will close with Moody's verdict on Italy's rating.
On 8 May, the agency postponed its examination of our country, leaving the rating at Baa3 (just one notch from the high yield or even junk segment) with a stable outlook. On 23 October however, surprisingly S&P confirmed its rating at BBB, raising the outlook from negative to stable.
INTESA SANPAOLO AND ENEL LEAD THE ACCOUNTS OF PIAZZA AFFARI
Week full of appointments on the corporate front in Italy and abroad. The quarterly reports of the most important banks will be released, starting with Intesa Sanpaolo (conference call 5 November), Banca Bpm, Unicredit, Monte Paschi, Bper, Banca Generali and other institutions. Now of the accounts also for the industry, starting with Leonardo, CNH and Ferrari.
The release of the data on car registrations for October should be noted in the evening. The accounts of General Motors and Toyota are arriving this week.
The spotlights are also on Enel which, as the first major global utility, has set a target for reducing emissions consistent with the United Nations' commitment to limit the maximum rise in global temperature to 1,5°C compared to pre-industrial levels.
IN THE EVENING THE NUMBERS OF THE CAR: FERRARI, GM AND TOYOTA
The release of the data on car registrations for October should be noted in the evening. The accounts of Ferrari, General Motors and Toyota are arriving this week.
But the international calendar presents many of interest. The quarterly of Pay Pal will allow to evaluate the impact of the opening of the bitcoin payment system. In the spotlight Astra Zeneca, one of the companies involved in the vaccine race.
PROOF OF APPEAL FOR ING AND SOC GEN
Among financials, keep an eye on the quarterly reports of French banks, Bnp Paribas and Crédit Agricole. The market is paying particular attention to the accounts of the Dutch ING, which in the second quarter suffered an 80 percent drop in profits. The same goes for Société Générale, back from a loss of 1,26 billion and for Commerzbank.
