Chinese President Xi Jinping attends a ministerial meeting in Canberra Monday, Nov. 17, 2014. Xi is continuing his visit to Australia following the G-20 summit.
Chinese President Xi Jinping attends a ministerial meeting in Canberra Monday, Nov. 17, 2014. Xi is continuing his visit to Australia following the G-20 summit. AP Photo - Rick Rycroft

US markets flat as China and Australia move toward FTA

Share Markets:

The US stockmarket was little changed on Friday night. The S&P 500 was flat, the Dow fell 0.1% and the Nasdaq gained 0.2%.

Interest Rates:

US government bond yields edged lower at the long end, with yields on 10-year bonds falling 2 basis points to 2.32%.

European bond yields fell with consensus beating, but still soft, Eurozone GDP figures failing to quell speculation about easing from the ECB.

Foreign Exchange:

The US dollar fell sharply despite better than expected retail sales data and strong consumer confidence data (although the inflation expectations components disappointed).

The Euro gained ground, with EUR/USD rising to 1.2546.

The Aussie strengthened, to currently trade above 0.8770 US cents, with expectations of an Australia-China free trade agreement today positive for the local currency.

Sterling fell to a 14-month low against the US dollar earlier in the session with investors winding back rate hike expectations from the Bank of England, although Sterling lifted from these lows in later trade.

The Yen weakened, falling to a seven-year low against the US dollar earlier in the session, amid ongoing speculation that Prime Minister Abe may call an early election, to consolidate his mandate for further stimulus.

Commodities:

The copper price gained on stronger US consumer confidence.

Australia:

There was no significant data released locally on Friday.

G-20 Leaders met in Brisbane this weekend. The communique was not market sensitive. However, it is expected that Australia and China will reach a free trade agreement today, which would be beneficial for Australia's economy, given China is Australia's largest trading partner.

China: 

Aggregate financing was lower than expected at 662.7bn yuan in October, down from 1135.5bn in September. Although some of the decline was due to seasonal factors, it was the weakest October credit growth since 2009.

Europe:

Eurozone CPI was in line with expectations, holding steady at 0.4% in the year to October. Core CPI growth was also unchanged at 0.7% in the year to October.

Eurozone GDP rose 0.2% in Q3, slightly above expectations for a 0.1% increase, but an anaemic rate of growth nonetheless.

This followed upwardly revised growth of 0.1% in Q2 (previously reported as 0.0%).

The upside surprise in Q3 was down to France, where GDP growth rose 0.3%. Germany had growth of 0.1% in Q3, while Italy re-entered a technical recession with growth of -0.1% in Q3. For the year to Q3, Eurozone economic growth held at 0.8%.

United Kingdom:

Construction output was softer than expected, rising 1.8% in September, after falling 3.0% in August. For the year to September, construction output climbed to 3.5%, from 0.8% in the year to August.

United States: 

Retail sales rose 0.3% in October, reversing September's 0.3% decline. Excluding autos and gas, retail sales rose 0.6% in October, with declining gasoline prices weighing on gasoline sales.

Consumer confidence jumped to a seven-year high of 89.4 in November, from 86.9 in October, according to the University of Michigan measure.

The import price index fell 1.3% in October, led by declining oil prices, after declining 0.6% in September. For the year to October, the import price index is down 1.8%, from -1.1% in the year to September.

In other news mortgage delinquencies kept falling in Q3 to 5.85% of all mortgages, down from 10.06% in Q1 2010.


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