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Breaking financial world news from 10 october, 2019.

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Breaking news

Fed sees increased downside risks to growth

Downside risks to the US economic outlook are on the rise, the US Federal Reserve said in minutes from its September policy meeting released yesterday. “Participants generally judged that downside risks to the outlook for economic activity had increased somewhat since their July meeting, particularly those stemming from trade policy uncertainty and conditions abroad,” the minutes stated, while “the weakness in business spending, manufacturing… would likely weigh on consumption and the overall economic outlook.” The current US growth forecasts stand at slightly over 2% for 2019-20 and just shy of 2% for 2021-22. Moreover, several participants noted that “the likelihood of a recession occurring over the medium term had increased notably in recent months.” To remind, the Fed cut the benchmark rate by 25 bps, taking the target interest rate range to 1.75-2.0%. Most FOMC members, according to their median projections, see the Fed funds rate unchanged by year end. At the same time, market participants, on average, expect the Fed to deliver one more rate cut in the coming months. Weak manufacturing and services PMI data that came out last week is yet another argument to support this view. The FOMC is scheduled to hold its next meeting on October 29-30.

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OECD unemployment drops to 1998 low

The unemployment rate in OECD member states ticked down 0.1% m-o-m to 5.1% in August, or the lowest reading since April 1998 when its monitoring got under way. Meanwhile, the number of unemployed dropped from 33.25 mn in July to 32.91 mn. The Eurozone unemployment rate edged down 0.1% to 7.4%, the level recorded in April 2008. The rate declined the most in Italy (-0.3% to 9.5%), and Portugal (-0.2% to 6.2%). The German unemployment rate remained at 3.1%, and the French rate stood at 8.5%. August unemployment remained stable in Canada, Japan, Mexico and the US at 5.7%, 2.2%, 3.5% and 3.7%, respectively. South Korea’s unemployment decreased 0.9% to 3.1%. Unemployment among young people (aged 15 to 24, inclusive) in OECD member states rose from 11.1% in July to 11.2% in August.

UK retail prices keep falling

Prices in UK stores decreased in September for the fourth straight month, with a price decline accelerating over the past few months. According to the data released by the British Retail Consortium (BRC) and market research firm Nielsen, September retail prices were on balance 0.6% lower than a year ago. Retail prices fell 0.4% in August. Non-food prices dropped 1.7% in September, while food price growth slowed down to 1.1%. As consumers are unconfident about their spending, retailers remain focused on capping price growth, Nielsen expert Mike Watkins pointed out. Meanwhile, BRC CEO Helen Dickinson emphasized that even though falling prices could help attract consumers, they will also put additional pressure on UK retailers’ profit margin. As business spending continues to rise, there is a risk that more famous stores will be closed, she said.

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Markets

US: benchmarks advance ahead of new round of trade talks

Major US equity benchmarks turned in positive performance on Wednesday, October 9. To remind, investors await the outcome of the US-China trade negotiations that will begin on October 10. At this point, the talks are not expected to produce any major breakthroughs, while the media wired yesterday that Beijing stands ready to sign only a partial trade agreement.

The minutes from the FOMC meeting came out yesterday, and market participants showed a neutral reaction. Most of the regulator’s policymakers highlighted good economic conditions in the country and mounting risks associated with a global economic slowdown due to the trade war.

On the macro data front, US wholesale inventories remained unchanged in August, while analysts forecast a 0.2% increase.

Recapping the indices, the blue-chip gauge Dow Jones Industrial Average advanced 0.7% to 26,346.01, the S&P 500 jumped 0.91% to 2,919.40 and the tech barometer Nasdaq settled 1.02% higher at 7,903.74.

In commodities, November NYMEX WTI ticked down 4 cents to USD 52.59/bbl, while December COMEX gold rose to USD 1,512.80/oz. The 10-year US government bond yield stood at 1.577%.

In the blue-chip segment, liquid names moved mostly higher, with the gains led by Microsoft, Intel, and Visa, while Johnson & Johnson, Goldman Sachs Group, and Walgreens Boots Alliance stood out among the underperformers.

Notable decliners included Levi Strauss & Co., which plunged 7.49% after the jeans wear manufacturer released financial results for the third fiscal quarter, with adjusted EPS sinking 4%.

Among the advancers, asset management company BlackRock added 0.97% to its market cap after investment bank Jefferies Group raised its target price for the stock.

Shares of the biggest US cosmetic goods company Johnson & Johnson dropped 2% on news that a court ordered J&J to pay USD 8 bn in damages to an American in a male breast growth case.

Oil major ExxonMobil gained 1.11% after reports that it hired Bank of America Merrill Lynch to assist it in selling Malaysian O&G assets which are valued at USD 2 bn.

Air carrier American Airlines Group surged 3.07% on reports that the company pushed back the return of its Boeing 737 MAX until mid-January 2020.

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S&P 500

The daily chart shows that the S&P 500 is still locked within a rising band, with the upper end at 3,115 and the lower end at 2,846. Stochastic lines are sell-friendly and still far from oversold territory, so the index still holds downside potential.

Breaking financial world news from 10 october, 2019.

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Europe: equities close to the upside

Key European stock indices landed in positive territory on Wednesday, October 9 as upbeat sentiment was sparked by news that the US and China were making headway ahead of high-level trade talks in Washington. In particular, the media reported that China remains open to a partial trade deal with the US, offering an increase in purchases of American agricultural products.

In sectoral terms, the list of outperformers included export-focused companies such as automakers and auto component suppliers, technology firms as well as luxury product players.

Recapping the benchmarks, the French CAC 40 firmed 0.78%, the UK’s FTSE 100 Index added 0.33%, and the German DAX advanced 1.04%. The regional indicator STXE 600 closed 0.42% higher at 380.30.

GVC Holdings, the owner of British betting and gambling operator Ladbrokes, soared 5.1% after upping full-year profit guidance for the second time in the last three months.

Low-cost airlines Ryanair and easyJet rose 5.5% and 2.2%, correcting higher after an earlier sell-off.

Dutch delivery service provider Takeaway.com picked up 2.0% as the company showed an 87% increase in orders for Q3 and reported progress in merger talks with British rival Just Eat.

France’s Airbus shed 0.3% as the media reported citing informed sources that the company’s aerospace and defense divisions unveiled downbeat full-year guidance.

European bourses have been showing mixed performance during the first half of trading on Thursday, October 10, as concerns about the upcoming US-China trade meeting scheduled for today are being offset by gains in luxury product suppliers.

As regards macro data, Germany’s trade surplus stood at EUR 18.1 bn in August compared to EUR 19.1 bn expected after EUR 20.2 bn a month earlier. By 08:18 GMT, the French CAC 40 and the UK’s FTSE 100 each rose 0.22%, while the German DAX edged down 0.05%. The regional indicator STXE 600 was off 0.36% at 378.92.

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DAX

On the daily chart, the German DAX continues to trade near the lower line of Bollinger bands, while the Slow Stochastic Oscillator is hovering near oversold territory. As a result, the benchmark will likely head further north in the short term.
Breaking financial world news from 10 october, 2019.

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Asia: markets close higher

Asian stock indices showed mostly a positive dynamic on Thursday, October 10, despite a mixed news flow surrounding the upcoming round of US-China trade talks. In particular, the media reported that the US administration is planning to grant licenses to a number of American companies in order to supply products to China’s Huawei Technologies. Meanwhile, other sources say that China is prepared to conclude only a partial trade deal with the US.

Key macro data included Japan’s machinery orders that decreased 2.4% in August, while analysts, on average, projected a 2.5% decline. In y-o-y terms, the indicator fell 14.5% vs. -10.8% expected. Furthermore, the country’s Tankan Business Confidence Index for September clocked in at -5 compared to -7 in September. Also, data on net foreign investment in local stocks showed the weekly inflow totaling JPY 1,072.5 bn compared to a JPY 221.2 bn outflow in the previous week.

In New Zealand, food prices were unchanged m-o-m in October compared to a 0.7% m-o-m rise in the previous month.

The Japanese Nikkei 225 added 0.45%, the Chinese Shanghai Composite advanced 0.78%, Hong Kong’s Hang Seng edged up 0.10%, the South Korean KOSPI slipped 0.61%, and the Australian S&P/ASX 200 closed 0.01% higher.

The S&P/ASX 200 standout advancers included Orora and Polynovo, which spiked 13.92% and 11.89%, respectively. On the other side of the spectrum, Clinuvel Pharmaceutical and Resolute Mining sank 14.75% and 11.23%.

The Nikkei 225 gainers were led by Aeon and Asahi Glass, which surged 6.81% and 3.87%, respectively. Among the notable laggards, Daiichi Sankyo and Nikon pulled back 1.90% and 1.82%.

In Japan, the list of outperformers included Aeon, AGC and Kawasaki Kisen Kaisha, which traded up over 2.5%.

Haseko and Nikon came under pressure, retreating over 1.9%.

Notably, industrial product manufacturer Asahi Kasei picked up 1.5% as its honorary employee Akira Yoshino won the Nobel Prize in chemistry.

In Hong Kong, AAC Technologies and Sunny Optical stood out among the advancers, climbing 7.75% and 3.64%, respectively.

In the Australian banking sector, Commonwealth Bank and National Bank of Australia ended in the red, while Australia & New Zealand Banking and Westpac picked up over 0.1%.

Mining giants BHP Billiton and Fortescue Metals closed 0.17% and 1.17% lower.

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Hang Seng

From a technical standpoint, the Hang Seng continues to consolidate within the range of 25,700-26,000, with price action now expected to move higher towards USD 26,100-26,200/bbl

Breaking financial world news from 10 october, 2019.

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Commodity markets

Oil prices have been in decline on Wednesday. Sentiment remains mixed as investors continue to parse the conflicting news surrounding today’s US-China trade talks. The Chinese media wired that Chinese and US deputy-level negotiations failed to make progress, and the Chinese delegation led by Vice Premier Liu He intends to leave Washington on Thursday after the first day, although the consultations were initially intended to last for two days. At the same time, the Trump administration’s representative said that the White House is unaware of Beijing’s plans to fly back from Washington earlier than planned. Citing its sources, Bloomberg wired that Liu He will stay in Washington until the end of Friday. In addition, Beijing does not expect to strike a comprehensive deal but stands ready to accept a partial agreement provided that the US refrains from imposing new tariffs on Chinese products and gives up earlier announced tariffs.

Yesterday’s EIA petroleum status report was ambiguous. Crude inventories recorded a built for the fourth straight week (+2.93 mn bbl), while analysts on average forecast only a 1.7 mn bbl increase. Gasoline showed a 1.2 mn bbl drawdown and distillates contracted by 3.94 mn bbl, or a record weekly drop since March. US crude production rose 200,000 bpd to a new record of 12.6 mn bpd.

Non-ferrous metals have reversed to the upside on the LME, while gold continues to trade within a narrow range of USD 1,500-1,520/oz.

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Breaking financial world news from 10 october, 2019.

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