Market Update 25/10/13

One line- Risk off moves on Chinese bank concern while the dollar continues to sell off.

- Asian markets sold off as concern about Chinese banks remains in focus. The seven day repurchase rate in China touched above 5% overnight. The Hang Seng lost 0.6% while the Nikkei was perhaps the biggest loser sliding 2.8%. Yen strength vs the dollar was a large contributor to the decline. While the dollar slides Treasury yields are falling as traders revise their prediction for the beginning of tapering. European stocks are broadly flat this morning while the S&P added 0.3% yesterday. Industrial metals are declining as the market takes risk off the table. http://www.ft.com/cms/s/0/ba1af31a-3d23-11e3-86ef-00144feab7de.html?siteedition=uk#axzz2iX5GUUWU

- Emerging stocks are headed for their largest weekly decline in two months as week earnings and Chinese bank concern has affected sentiment. Earnings missed estimates for more than half of the 90 companies in the MSCI Emerging Markets Index. The index is off 1.6% this week. http://www.bloomberg.com/news/2013-10-25/emerging-stocks-head-for-steepest-weekly-decline-in-two-months.html

- The UK economy grew at its fastest rate in three years in the third quarter growing GDP at 0.8%, the largest quarterly increase since 2010. As macro indicators for the UK improve investors are beginning to question whether Carney will have to bring forward a rate rise. The pound strengthened 0.1% this morning against the dollar. http://www.bloomberg.com/news/2013-10-24/u-k-gdp-growth-seen-accelerating-to-strongest-in-three-years.html

- Japanese inflation is near a 5 year high at 0.7% showing a slight slowdown from the 0.8% measurement in August. Economists are concerned by the source of the inflation which is not from stronger aggregate demand, but rather the product of a weaker yen making imports more expensive. http://www.ft.com/cms/s/0/edb19484-3d0c-11e3-86ef-00144feab7de.html#axzz2iX5GUUWU

- Samsung electronics quarterly profit surged 26% to a record high matching estimates. While Samsung has posted record profits in 6 of the last 7 quarters it may find it hard to maintain momentum without a new hit gadget following unsuccessful launches of the Galaxy Gear smartwatch and the Galaxy Round phone. http://uk.reuters.com/article/2013/10/25/us-samsung-earnings-idUKBRE99N1MB20131025

Data

S&P 1752.07 0.33%

FTSE 6710.60 0.04%
Nikkei 14,088.19 2.75%

EUR/USD- 1.3805 0.03%
USD/JPY- 97.16 0.12%
GBP/USD- 1.6210 0.05%

Gold- 1343.11 0.27%
Oil (Brent)- 106.70 0.27%

Copper- 324.15 0.67%

 

 

10 year yields

US- 2.51 (-1bps)
UK- 2.64 (+1bps)
Japan- 0.61 (0bps)