Market Update 18/10/13

One line- Markets buoyed by positive Chinese GDP data and the likelihood tapering is now further away than before the debt impasse.

- China's GDP grew in line with expectations at 7.8% the first acceleration in growth in 3 quarters. Chinese Premier Li Keqiang spurred investment and factory output to meet the governments growth goal for 2013. Industrial production increased by 10.2% while retail sales added 13.3%.  http://www.bloomberg.com/news/2013-10-18/china-s-economy-grew-7-8-in-third-quarter-matching-estimates.html

- Markets are buoyed by the positive Chinese growth and the prospect that the extended government shutdown makes tapering unlikely in the near term. Global stocks hit a 5 year high while the S&P added 0.7%, the Nikkei lost 0.2% and the FTSE is up 0.2% this morning. Industrial commodities are firmer while bond yields continue to trend downwards. http://www.ft.com/cms/s/0/3c692f18-37a6-11e3-b42e-00144feab7de.html?siteedition=uk#axzz2hgOooFmp

- Gold had its biggest one day gain in a month (3.2%) yesterday as traders scrambled to cover their shorts. A downgrade of the US credit rating by the Chinese firm Dagong caused an initial rally while traders who were short expecting to profit following a fiscal deal were caught off-guard.  http://www.ft.com/cms/s/0/4dfb11a4-374e-11e3-9603-00144feab7de.html#axzz2hgOooFmp

- Investors expectation of a delayed tapering is pressuring the dollar which sold off against all its major counterparts on Thursday and early Friday. Among the gainers were the euro up 1%, the swiss franc up 1.2% and sterling up 1.4%. Emerging currencies have experienced some respite with many central banks tightening monetary policy. This coupled with the political turmoil in the US has helped reverse their slide which occurred earlier in the year when Bernanke announced the possibility of tapering.  http://www.ft.com/cms/s/0/c04a9bd8-37c8-11e3-8668-00144feab7de.html#axzz2hgOooFmp

- The economic recovery in the UK has helped David Cameron pull level in the polls against the Labour party 18 months before the election. Both parties have 35% support from the electorate.  http://uk.reuters.com/article/2013/10/17/uk-britain-politics-idUKBRE99G0PP20131017


Data

S&P 1733.15 0.67%

FTSE 6592.79  0.25%
Nikkei 14,561.54 0.17%

EUR/USD- 1.3623 0.10%
USD/JPY- 97.86 0.05%
GBP/USD- 1.6186 0.13%

Gold- 1315.87 0.34%
Oil (Brent)- 109.15 0.04%

Copper- 331.05 0.41%

 

 

10 year yields

US- 2.55 (-4bps)
UK- 2.70 (-4bps)
Japan- 0.61 (-1bps)