Overnight Points of Interest

Posted by Graham Parlane on 11 November 2014

Good morning

Ahead

# Australian NAB Business Confidence

# Australian House Price Index

# China New loans

# U.S. Veterans Day

Overnight

# European shares shrugged off news that over two million Catalans had voted overwhelmingly in favour of independence, defying a Spanish court. Further, a contraction in the Italian manufacturing sector was also dismissed as bourses put in solid gains, the Stoxx600 ending up 0.73%. U.S. stocks edged higher into new record territory with the main bourses up about 0.25%. The Dow Transports however, historically seen as a leader of overall equities moves, continues to substantially outperform, up 1.15% heading into the close.

# After arriving in Beijing on the first leg of an eight-day Asia tour, President Barack Obama says he sees momentum building for a Washington-backed free trade agreement in the Asia-Pacific region. U.S officials previously ruled out a major announcement on the 12-country Trans-Pacific Partnership in Beijing. Meanwhile, China's Xi Jinping and Japan's Shinzo Abe held a landmark meeting, opening the door to restoring economic discussion and diplomatic ties. "This is a first step towards improving bilateral relations, returning to the core of a mutually beneficial relationship based on common strategic interests," said Abe after the summit. The talks mark the first time the two leaders held formal talks since they took office in 2012.

# Individual global investors will get a chance to buy Shanghai-listed stocks for the first time, after direct cross-trading of Shanghai and Hong Kong stocks begins on Nov. 17. The originally hoped-for launch date in late October was postponed amid the pro-democracy protests in Hong Kong. The move is a big step towards Chinese markets' integration with the rest of the global system, and is expected by many to open the door for China to be added to international benchmarks like those maintained by MSCI and FTSE.

# With 90% of the S&P500 companies having now reported for Q3, the positive earnings surprise sits at 5.25%. Earnings continue to provide a fundamental underpinning for equities.

# The USD put in a solid session, recouping most of Friday’s losses as the market continued to digest the monthly job report and come to a more appropriate conclusion. As suggested in yesterday’s report the USD move Friday now looks even more a reflection of overweight positioning rather that a fundamental response.

# A research piece by the San Francisco Fed suggest U.S. rates may rise more than many on the FOMC expect. The research suggests Fed members may be incorrectly speculating that the potential for U.S. long term growth is now lower and therefore the track for rates is lower. “In contrast, examination of private-sector professional forecasts and historical data provides little evidence of such a linkage,” they wrote. “This suggests a greater risk that future interest rates may be higher than expected.”

# U.S. yields, as measured by the 10 year note surged back from Fridays’ sharp move slower with the note yielding 2.36% this morning from 2.29% yesterday.

# The commodity rout returned in force with Fridays’ move higher seen as the briefest of respites. Comments from Kuwait's oil minister that OPEC is not considering production cuts and the UAE's oil minister that there was no need to panic over the price of oil at current levels stifled Fridays relief rally and sent the Brent complex to fresh 4 year lows. Meanwhile, Gold which had surged over 4% post payrolls gave back almost 3%