Market movers today
There is pressure on European financial markets given the weak economic growth data from Germany, Brexit and the budget clash between Italy and the EU.
Yesterday, PM Theresa May got support for her Brexit deal from the cabinet as expected. She said it was a ‘collective’ not a ‘unanimous’ decision, suggesting that some ministers were against the deal.
Today, there is a string of US data due – US retail sales that have been robust for a long time on the back of a strong labour market and tax cuts earlier this year. We expect it to stay decent as household fundamentals are still strong. The two regional surveys, Empire Index and Philadelphia Fed, will give the first indication of manufacturing confidence in October. Recently, ISM manufacturing has softened and in line with consensus, we expect surveys to moderate further from the quite high levels reached earlier this year. Initial jobless claims and import prices are also due for release today.
In Scandi, Swedish unemployment and the Norwegian trade balance are being released.
Selected market news
PM Theresa May got support for her Brexit deal from the Cabinet, but it was not a ‘unanimous’ decision, suggesting that some ministers were against it. The real test is still whether it can pass the House of Commons, where a vote is expected in mid-December.
Markets are still uncertain, which was reflected in the modest move in GBP yesterday. Hence, we need more confirmation on the deal before we can see GBP strengthening.
Asian equity markets were also mixed this morning after a slide in US equity markets late yesterday. The negative reaction in the US equity markets was due to Fed Chair Powell indicating that the recent volatility in the markets would NOT change US monetary policy in a Q&A session very late yesterday evening.
He indicated that equity market volatility was only one of many factors that the Fed was considering when setting rates. His comments also confirmed the expectations of a December hike from the Fed.
