Financial market research and analysis

Chinese GDP grew at a pace of 6.7% in the third quarter, as expected. Industrial production slowed to 6.1% year-on-year from 6.3%, while retail sales grew at a stable, yet solid pace of 10.7% y/y.

Oil rebounded more than 1%, commodities traded flat.

Shanghai’s Composite (+0.03) and Hang Seng (-0.62%) traded flat-to-negative; Nikkei added a meagre 0.21% as the yen strengthened by 0.34% against the US dollar.

The WTI traded past $51 in Asia. Due later in the day, US crude oil inventories are expected to have increased by 2.2 million barrels, versus 4.9 million last week. If the decline in US crude inventories growth meets market expectations, the WTI could gain enough momentum to clear the $52 resistance for a further surge towards the $53/$55 mid-term resistance.

Appetite in the US dollar remained mixed heading into the US final presidential debate in Las Vegas. The markets broadly price in a Clinton victory, while the risk of a Trump win appears to be underpriced.

The UK’s jobless claims surprised positively, with only a small 0.7K rise in September, versus 3.2K expected and 2.4K previously. Yet, wages grew at the steady pace of 2.3% y/y. The inertia in UK’s earnings growth, compared with the rising inflationary pressures, warned that the purchasing power of British households would be compromised should the improvement in wages stagnate.

Is the UK’s macroeconomic picture slowly turning bitter?

Although the Bank of England (BoE) is expected to tolerate higher inflation in the mid-term, overheating consumer prices could inopportunely hold the Bank of England (BoE) from taking a further unorthodox step to avoid a potential, post-Brexit recession across the country.

The pound has been among the worst performers in Asia, yet recovered past 1.23 against the US dollar in London. A successful attempt above the 1.2295/1.2325 resistance area, should pave the way towards 1.2440, a half-way recovery following the decline from the September 29^th high to October 7^th ‘flash crash’.

The FTSE 100 tested the 7000p handle at the open, yet failed to gain enough momentum for a bullish development at the London open. British estate agent group Foxtons said that lower property sales in London had pushed quarterly sales down by a third, while builders merchant Travis Perkins (-6.65%) warned that it would not meet market expectations for full-year profits, due to a disappointing performance in its plumbing and heating business.

UK financials wrote-off 0.50%, while gains in energy stocks remained limited.