Overnight Points of Interest

Posted by Graham Parlane on 6 November 2014

Good morning

Ahead

# Japan Monetary Policy Meeting Minutes

# Australian Employment report and Unemployment Rate

# UK Manufacturing and Industrial Production

# BOE MPC Rate Statement

# ECB Rate Decision

# U.S. Weekly Unemployment Claims

# U.S. Building Permits

Overnight

# European stocks more than reversed the prior days losses as a raft of strong earnings reports hit the market, the Stoxx600 ending the session up 1.66%. U.S. bourses meanwhile are on track for fresh record closes as the perceived business friendly Republicans gained control of the powerful U.S. senate in the mid-term elections. Going into the close the Dow is up 0.54% and the S&P500 up a similar 0.50%.

# President Obama’s ruling Democrats suffered a large scale defeat in the US mid-term elections with the party losing control of the US Senate by a wider margin than predicted and their Republican opponents on the verge of securing their largest majority in the House of Representatives since the 1940s. Republicans gained 7 Senate seats from Democrats, cementing the GOP’s power base on Capitol Hill. They were poised to take an eighth, Alaska, and if they win a runoff in Louisiana, Republicans would command a 54-vote majority in the Senate. The Republicans now control both the House and the Senate. Financial markets took the result as positive for equities and the USD, as Republicans are generally seen as more business-friendly.

# The USD was well bid on the U.S. mid-term results with the biggest casualty of that strength being the AUD which took nothing short of a pounding on falling metals and iron ore prices. Iron ore fell by 2.0% yesterday, after China’s authorities ordered steel mills to slow production in an effort to reduce haze ahead of an APEC summit in Beijing. The AUD/USD is down by 1.8% to 0.8580, a fresh four-year low. The move was exacerbated by stops being broken at the previous ‘double bottom’ 2014-low of 0.8640. Meanwhile the USD/JPY soared to fresh 7 year highs after BOJ Gov. Kuroda addressed markets yesterday. He left no room for confusion over what his intentions were saying he would do “whatever it takes” in comments reminiscent of the ECB’s Draghi’s much vaunted European crisis move and went on to say that there were “no limits to the BOJ’s policy tools”.

# The private U.S. payrolls firm ADP released its monthly employment report which suggested the U.S. added a healthy 230,000 jobs in October. This was up from the upwardly revised 225,000 added in September. It was also stronger than the 220,000 expected by economists.

# It was simply ugly for the Eurozone retail sales data release. Sales sank 1.3% in September, far deeper than analysts expected and the deepest slowdown since April 2012. The prior month was also sharply marked down from 1.2% to 0.9% crimping the annual rate of growth to just 0.6% from 1.4% previously. The data comes hot on the heels of the common currency zone’s growth downgrade yesterday.

# U.K. service sector activity expanded at the slowest pace in 17-months in October. The seasonally adjusted Markit Services PMI fell to 56.2 last month from a reading of 58.7 in September. Analysts had expected the index to decline to 58.5 in October. Commenting on the report, Chris Williamson, Chief Economist at survey compilers Markit said, “After GDP growth slowed to 0.7% in the third quarter, a 0.5% expansion is currently being signalled by the surveys for the fourth quarter."