Overnight Points of Interest

Posted by Graham Parlane on 14 November 2014

Good Friday morning

Ahead

# German, French and Italian GDP

# Eurozone GDP

# U.S. Retail Sales

# University of Michigan Consumer Sentiment

# G-20 meetings

Overnight

# European stocks experienced a volatile session to end moderately higher, the Stoxx600 finishing up 0.23%. Initial gains were seen on solid corporate earnings but the index briefly turned negative after a surprise rise in U.S. unemployment claims however news of yet another Buffet takeover lifted proceedings late in the piece. Meanwhile U.S. bourses traded either side of par throughout the day with energy shares weighing as crude prices took another significant tumble. Apple Inc. rose to a fresh record while Microsoft , up 1.2%, swelled to a market cap above $407 billion and overtook Exxon Mobil as the second-largest publicly traded U.S. company, behind Apple. The developments an expression of a rapidly changing world indeed.

# Thomson Reuters data showed that of 460 companies in the S&P 500 reporting so far, 74.6% beat expectations, above the 63% average beat rate since 1994 and 67% for the past four quarters. Earnings overall were expected to grow 10.1% over the year-ago period.

# The U.S. labour market gauge JOLTS (Job Openings and Labour Turnover Survey), purportedly one of Fed chair Yellen’s favourite indicators, came in rather upbeat. Over 5 million people were hired in September, marking the first time hiring crossed the 5 million level since December 2007. At the same time, 2.8 million people quit a job, the most since April 2008. Perhaps contrary to the quit headline, a higher quit rate is a sign of an improving labour market because it tends to indicate that workers are confident they'll find another job or one that pays more.

# Further regarding the U.S. labour market, weekly jobless claims rose by 12,000, to 290,000. That was above the 281,000 claims expected by economists. However, despite the headline miss, the report marked the 9th straight week that claims have been below 300,000, their longest stretch below this level since 2000.

# U.S. crude oil futures settled at their lowest level in four years (US$74.50) on Thursday with loses accelerating late in the session after data showed crude stocks had been built up. Brent crude also fell to a 4 year low and was last below $79 a barrel on concerns that China will see further economic slowdown and as Saudi Arabia kept silent about a possible cut in production. China's economy lost momentum in October, with China industrial production 7.7% y/y v 8.0% expected and dipping and investment growth which came in near 13-year lows, reinforcing expectations of a slower increase in fuel demand.

# Reports from China that Gold demand continues to slump, losing ground for a 3rd quarter, as the nationwide anti-graft drive from the Xi Jinping administration hurts demand for luxury goods including bullion. The move not lost on top-end exporters of seafood from Australia and NZ.

# UK House price momentum continued its slowdown last month and growth is now at its weakest level since May 2013. Rics said the London index dipped to -35 in October, down from -9 in September, the most widespread price falls in the capital in 4 years.

# The U.S. and India have reached an agreement on stockpiling of food by governments, clearing a major stumbling block for the implementation of the World Trade Organization's trade facilitation deal that has been stalled for months. The WTO estimates the deal will add more than $1trln to the world economy by reducing regulatory hurdles at international borders.

# Japanese Prime Minister Abe appears to have decided to call an early election, likely scheduled for December. The news was enough to send Japanese stocks to fresh seven-year highs again, with the Nikkei closing up 1.1% at 17,392.79. The move buoyed stocks on the basis that the move will impede the implementation of further sales tax hikes.