Market Update
Europe Movers: Allianz, Banco Bilbao, BAE Systems, Deutsche Bank, Melrose, Pennon Group, United Utilities
Inga Muller
02 Oct, 2023
Frankfurt
European markets struggled amid interest uncertainties and persistent weakness in the manufacturing sector.
The DAX index decreased 0.2% to 15,360.30, the CAC-40 index eased 0.3% to 7,117.18 and the FTSE 100 index fell 0.4% to 7,579.41.
Banco Bilbao Vizcaya Argentaria, S.A. increased 1% to €7.79 after the Spanish bank received an approval from the European Central Bank for its stock repurchase program of up to €1 billion.
BAE Systems Plc added 0.9% to 1,006.50 pence after the company won a £4 billion submarine contract from the UK government as a part of the AUKUS program with the U.S. and Australia to build attack submarines.
United Utilities Group Plc gained 1.8% to 965.20 pence after the company reiterated its outlook for the year ending in March.
Deutsche Bank AG decreased 1% to €10.34 after local news reports suggested that the German financial regulator has appointed a special monitor to oversee the company's handling of customer service problems at its unit Post Bank.
Allianz SE declined 0.3% to €224.20 and the company extended the tenure of Oliver Bates as chief executive and chairman of the board.
Melrose Industries Plc decreased 0.5% to 466.70 pence after the company launched its £500 million stock repurchase program.
Pennon Group Plc jumped 3.7% to 607.75 pence after the water and waste water management company said business performance is in-line with management expectations in the first-half ending in September.
Persistent Weakness In European Manufacturing Sector, Record Low Jobless Rate In Euro Area
Bridgette Randall
02 Oct, 2023
Frankfurt
European markets reversed earlier gains after the release of manufacturing survey and amid ongoing rate path worries.
Market indexes in Frankfurt, Paris and London edged lower amid worries of continuing slowdown in the manufacturing sector.
The final euro zone HCOB manufacturing Purchasing Managers' Index declined to 43.4 in September from 43.5 in the previous month.
The reading below 50 indicated contraction, and the latest survey showed demand declined at the fastest pace since record keeping began in 1997.
A separate survey showed that the UK's manufacturing sector continued to face weakening activities in September.
The seasonally adjusted S&P Global/CIPS manufacturing purchasing managers' index edged slightly higher to 44.3 from 39-month low of 43.0 in August.
Manufacturing sector outlook remained weak because of weak demand from domestic and foreign customers.
Job market conditions remained tight in the Euro Area and the jobless rate declined to the lowest level since record keeping began in 1995.
The seasonally adjusted jobless rate in the Euro Are decreased to 6.4% in August from the upwardly revised 6.5% in July, Eurostat reported Monday.
Jobless rate in August a year ago was 6.7%.
The number of unemployed people decreased by 107,000 from the previous month to 10.856 million.
Of the four large economies in the Euro Area, Germany recorded the lowest jobless rate of 3% and Spain led with the highest rate of 11.5%.
Jobless rate in Italy and France was 7.3%.
Meanwhile, the youth unemployment rate, jobless rate among jobseekers 25 years and younger, edged down to a record low of 13.8% in August 2023, from 13.9% in July.
Europe Indexes & Yields
The DAX index decreased 0.2% to 15,360.30, the CAC-40 index eased 0.3% to 7,117.18 and the FTSE 100 index fell 0.4% to 7,579.41.
The yield on 10-year German bonds increased to 2.87%, French bonds traded higher to 3.43%, the UK gilts edged up to 4.47% and Italian bonds rose to 4.78%.
The euro edged lower to a three-month low to $1.05, the British pound to $1.21 and the U.S. dollar fetched 91.41 Swiss cents.
Brent crude increased $0.91 to $93.11 a barrel and the Dutch TTF natural gas edged higher by €1.66 to €40.20 per MWh.
Europe Stock Movers
Banco Bilbao Vizcaya Argentaria, S.A. increased 1% to €7.79 after the Spanish bank received an approval from the European Central Bank for its stock repurchase program of up to €1 billion.
BAE Systems Plc added 0.9% to 1,006.50 pence after the company won a £4 billion submarine contract from the UK government as a part of the AUKUS program with the U.S. and Australia to build attack submarines.
United Utilities Group Plc gained 1.8% to 965.20 pence after the company reiterated its outlook for the year ending in March.
Deutsche Bank AG decreased 1% to €10.34 after local news reports suggested that the German financial regulator has appointed a special monitor to oversee the company's handling of customer service problems at its unit Post Bank.
Allianz SE declined 0.3% to €224.20 and the company extended the tenure of Oliver Bates as chief executive and chairman of the board.
Melrose Industries Plc decreased 0.5% to 466.70 pence after the company launched its £500 million stock repurchase program.
Pennon Group Plc jumped 3.7% to 607.75 pence after the water and waste water management company said business performance is in-line with management expectations in the first-half ending in September.
China's Golden Week Offers Hopes for Consumer Spending Rebound
Arjun Pandit
02 Oct, 2023
Mumbai
Market indexes in Asia lacked enthusiasm in holiday shortened trading in the region and the yen dropped to an 11-month low in Tokyo.
Asian markets have been under pressure for the last three months on twin worries of falling local currencies and looming global economic slowdown.
The Japanese yen and the Chinese yuan are trading near multi-year lows and the Indian rupee is hovering near a record low after the U.S. dollar rebounded on the expectations of higher interest rates.
The Japanese yen has been under pressure after the Bank of Japan continues to support its ultra-loose monetary policy amid rising global interest rates and expectations of a rebound in domestic interest rates.
The Japanese yen traded at a new 11-month low, matching the level last seen in 1990.
The yield on 10-year Japanese government bonds advanced advanced as much as 0.775% and the Bank of Japan announced its plan to purchase bonds of unspecified amounts on Wednesday.
The central bank also purchased 300 billion yen or $2 billion of Japanese government bonds in Friday's trading, and the Bank of Japan swung into action after the yield on 10-year bonds jumped to a 10-year high and approached the 1% target rate.
China Property Woes Deepen
Moreover, China's property woes are deepening amid lack of demand from buyers and growing uncertainties about the health of large property developers.
Mortgage boycotts are likely to spread from second tier cities to Shanghai after the One Rivera residential complex missed two delivery deadlines.
Trading in China Evergrande Group and its two subsidiaries was suspended on September 28 and the government alleged financial irregularities and siphoning of funds to overseas destinations.
Golden Week Consumer Spending Expected to Rebound
Economists and investors are also watching for signs of economic recovery after the nation kicked off eight-day long Golden Week holiday.
The combined National Day and Mid-Autumn Festival is expected to lift consumer spending higher after three years of Coid-19 related lockdowns and disruptions.
Based on the initial bookings, the railway authorities are forecasting 190 million trips during the holidays, a 39% jump compared to 2019 level.
Weak consumer spending and falling economic growth has dragged down travel, leisure and consumer stocks down in the year so far.
Consumer stocks, from the makers of home appliances, furniture, food and beverages, have remained under pressure since the beginning of the year.
Consumer spending during the Golden Week generally serves as a barometer of economic growth in the second half and investors are still estimating China's economy to grow between 5.0% and 5.5% in 2023.
The week-long holiday is the second holiday period after a five-day Labor Day break, since the authorities lifted draconian Covid-19 restrictions on December 7, 2022.
During the five-day Labor Day holiday, travel and leisure spending jumped to 148 billion yen, roughly matching the level last seen in 2019, according to the data released by the government.
Gold, Jewelry Sales and Yuan
Gold futures traded record high on the Shanghai Futures Exchange after consumers stepped up purchase of gold jewelry after the yuan dropped to a record low level.
Investors seeking to preserve wealth and rising wedding-related demand are driving gold and jewelry prices higher and August gold jewelry sales soared 7.2% to 28.3 billion yuan or $3.9 billion.
Asia Market Indexes
In Monday's trading, the Nikkei index increased 0.6% to 32,055.96 and the yen dropped to an 11-month low matching the low about 25 year ago to 149.74 against the U.S. dollar.
Financial markets are closed in India, China, Hong Kong and South Korea to observe local holidays.
Elsewhere in the region, market indexes in Singapore and Taiwan lacked direction but advanced 0.2% but the indexes in Malaysia, Indonesia and Australia traded down between 0.2% and 0.3%.
U.S. Narrowly Averts Government Shutdown
Trading sentiment in Asia was cautious after the U.S. government narrowly averted a federal government shutdown and passed a spending bill for the next two weeks.
If lawmakers do not approve additional spending in the next two weeks, the federal government is facing a shutdown on November 17 and rating agencies are likely to cut the U.S. government debt rating.