Original insights into market moving news

[PODCAST] European Open Rundown 19th November 2021

  • Asia-Pac stocks traded mostly positive; Hang Seng lagged amid substantial losses in Alibaba
  • S&P 500 and Nasdaq notched fresh record closes; overnight US equity futures drifted higher
  • In FX, the DXY remained above 95.50, EUR/USD tested 1.1350 to the downside and AUD narrowly outperformed
  • A compromise over the European Court of Justice could be within reach in Northern Ireland Protocol talks, according to sources
  • The White House confirmed the US discussed a possible joint release of oil from reserves with China and other countries
  • US House Democrat leaders are aiming for a vote on “Build Back Better” on Friday
  • Looking ahead, highlights include UK Retail Sales, Canadian Retail Sales, ECB's Lagarde and Moody's/S&P on South Africa


German Chancellor Merkel stated that above a certain local hospitalisation rate, access to large parts of public life will be limited to vaccinated and recovered. Furthermore, Chancellor-in-waiting Scholz said they will see restrictions this winter that have not been put in place before, while German Regional Leader Wuest said that they will decide by 9th December if further measures are needed. (Newswires)

Greek PM said that from next week, they are to impose more restrictions for the unvaccinated against COVID-19. (Newswires)


Asia-Pac stocks traded mostly positive after the mixed performance stateside where the S&P 500 and Nasdaq notched fresh record closes, but cyclicals lagged as comments from Senator Manchin cast some uncertainty on the Build Back Better bill. The ASX 200 (+0.2%) was rangebound with upside in healthcare and consumer stocks offset by weakness in tech and a lacklustre mining sector. Crown Resorts (CWN AT) was the stellar performer after it received an unsolicited, non-binding takeover proposal from Blackstone (BX) valued at AUD 12.50/shr which boosted its shares by around 16%, although gains in the broader market were limited as COVID-19 concerns lingered following a further jump of cases in Victoria state. The Nikkei 225 (+0.5%) benefitted from a mostly weaker currency and after PM Kishida confirmed the details of the incoming stimulus package valued at a total JPY 79tln including JPY 56tln in fiscal spending. The KOSPI (+0.9%) was also positive but with gains initially capped as South Korean wholesale inflation surged to a 13-year high and further added to the case for the BoK to hike rates for the second time this year at next week’s meeting. The Hang Seng (-1.3%) and Shanghai Comp. (+1.0%) were mixed with the mainland kept afloat amid press reports that China is considering measures to reduce taxes and fees by up to CNY 500bln, although the mainland was initially slow to start after another liquidity drain by the PBoC and with stocks in Hong Kong spooked amid substantial losses in Alibaba following a miss on its earnings and Country Garden Services suffered on reopening from the announcement of a 150mln-share placement. Finally, 10yr JGBs were rangebound with mild gains seen after the modest bull flattening stateside, but with upside restricted amid the gains in Japanese stocks and lack of BoJ purchases, as well as the incoming fiscal spending and extra budget from the Kishida government.

  • PBoC injected CNY 100bln via 7-day reverse repos with the rate at 2.20% for a CNY 50bln net daily drain. (Newswires)
  • PBoC set USD/CNY mid-point at 6.3825 vs exp. 6.3780 (prev. 6.3803)

China is reportedly considering measures to reduce taxes and fees by up to CNY 500bln. In other news, some Chinese cities relaxed land transaction regulations after a reluctance of some cash-strapped developers from bidding in land sales. (Newswires/China Daily)

China Beige Book CEO Miller said they are seeing large de-risking in finance and real estate but noted Evergrande (3333 HK) will be contained, while he added that possibilities in China are limited due to a lack of outside financing. (Newswires)

Japanese PM Kishida confirmed the stimulus package total is worth JPY 79tln including JPY 56tln in fiscal spending and with JPY 31.9tln to be funded by an extra budget. (Newswires)

  • Japanese National CPI YY (Oct) 0.1% vs. Exp. 0.2% (Prev. 0.2%)
  • Japanese National CPI Ex. Fresh Food YY (Oct) 0.1% vs. Exp. 0.1% (Prev. 0.1%)
  • Japanese National CPI Ex. Fresh Food & Energy YY (Oct) -0.7% vs. Exp. -0.7% (Prev. -0.5%)


US President Biden said he is weighing a US diplomatic boycott of the 2022 Winter Olympic games due to be held in Beijing. (BBC)

China allowed an American under an exit ban to return to the US just hours before the meeting between US President Biden and Chinese President Xi, while US also deported seven Chinese nationals convicted of crimes in the US, while a US official denied it was an exchange. (Newswires)


A compromise over the European Court of Justice could be within reach in the Northern Ireland Protocol talks, according to sources. (The Telegraph) Irish PM Martin said there is "serious intent" in the EU to solve post-Brexit difficulties over the Northern Ireland border. The Irish PM added that the mood surrounding EU-UK negotiations had improved in recent weeks. (BBC)

  • UK GfK Consumer Confidence* (Nov) -14 vs. Exp. -18.0 (Prev. -17.0)


In FX, the DXY was more composed overnight and off the lows seen during the prior session where it briefly approached the 95.50 level as yields softened. The focus was also on President Biden’s USD 1.75tln social spending and climate change bill which was advanced to the final stage of the House passage after receiving the CBO score, with House Democrat leaders aiming for a vote on Friday. EUR/USD retraced some of yesterday’s gains with the single currency not helped by the increasing COVID-19 concerns with Germany, Greece and a couple of Austrian states to place tighter restrictions on the unvaccinated. GBP/USD was uninspired with the currency contained by resistance at 1.3500 and mixed Brexit-related headlines in which Irish Foreign Minister Coveney stated that the lack of reciprocal compromises by the UK on the Northern Irish protocol is disappointing, although another report stated that a compromise over the European Court of Justice could be within reach in the NI Protocol talks. USD/JPY benefitted from the mostly positive risk tone and antipodeans were steady amid a sparse calendar, although CBA raised their forecasts for AUD/USD through to Q3 next year amid quicker global progress on vaccinations which should boost activity.


WTI crude futures extended on the prior day's gains with prices helped by the mostly positive risk tone and recent softness in the greenback, while the White House also confirmed that it discussed oil reserves release with other countries including China. Conversely, there were reports that Venezuela's petrochemicals and oil by-products exports are on course to double by year-end and Total CEO provided a cautious tone on prices which he noted could go down in the event of fresh virus waves, although these had little sway on prices which briefly reclaimed the USD 79.00/bbl level. Gold remained afloat but with upside capped as the USD composed itself overnight and copper strengthened amid the mostly constructive mood and reports of potential Chinese government measures.

White House confirmed the US discussed a possible joint release of oil from reserves with China and other countries, while it reiterated that it has raised the need for available oil supply in the market with OPEC. (Newswires)

Venezuela's petrochemicals and oil by-products exports are on track to double by the end of the year, according to sources and data from PDVSA and Pequiven. (Newswires)

Total CEO said demand from the aviation industry for fuel is not yet back to normal levels and that oil prices could go down in the case of new COVID-19 waves. (Newswires)


White House said they discussed Ukraine with Russia recently and are not ruling out a future meeting between Presidents Biden and Putin, while it also noted that it has not changed its approach to sanctions on Iran ahead of nuclear talks. (Newswires)


Fed's Evans (2021, 2023 voter) expects good momentum for the US economy well into 2022 and is optimistic about 2022, while he added that the labour market will continue to improve next year as more people come back into labour force and expects unemployment to go below 4% or maybe 3.5% next year. Evans added that there is a long way to go before price inflation gets embedded through expectations and reiterates that by mid-2022, they can assess the employment and fiscal situation, as well as inflationary pressures and how much they should adjust the stance of monetary policy. Evans also stated that rate hikes could begin next year or in 2023 but it will depend on inflation and they may have to lean into slightly more restrictive policies than was expected six months ago, while he added that policy adjustments can be relatively gradual and expects they will make policy adjustments in 2022 and 2023 but is more open minded to adjustments in policy in 2022. Furthermore, he still expects no rate hike until 2023 but may be "flat out wrong" and stated it is not obvious to him that a 2022 rate hike is necessary or called for but it could be the case that it is appropriate, while he expects no rate hike before taper ends in June and no change to the taper timeline. (Newswires)

Fed's Bostic (2021, 2024 voter) said he anticipates it will be appropriate by next summer to normalise policy, according to an NPR Marketplace interview. (Newswires)

US Democratic Senator Manchin said he is looking very favourably at Fed Chair Powell for re-nomination but hadn't made a final decision. (Newswires)

US House advanced President Biden's USD 1.75tln social spending and climate change bill to a final debate and passage, with House Democrat leaders aiming for a vote on Friday. In relevant news, the CBO said President Biden's bill is not fully paid for and would increase the budget deficit by USD 367bln over a decade with the bill to add USD 1.636tln in spending and generate USD 1.269tln in revenue over 10 years, although its estimates does not include any revenue generated by additional financing through tax enforcement.

Treasury Secretary Yellen said estimates make it clear the Build Back Better bill is fully paid for and will reduce nation's debt over time by generating more than USD 2tln through reforms, while the White House said Build Back Better would reduce the deficit by USD 112bln over the next decade in its new analysis. (Newswires)

US Senate Minority Leader McConnell left Senate Majority Leader Schumer's office after a 20-minute meeting and said the two had a "good discussion" and will continue to talk to each other, but provided little other details, which followed reports they were meeting to discuss the debt limit issue. There were also separate comments from Republican Senator Toomey that Democrats should raise the debt limit on their own and he is willing to support Democrats to speed up debt limit action. (Newswires)

US President Biden said he will talk about electric vehicle tax incentives with Canadian PM Trudeau, while it was later reported that Canadian PM Trudeau said he raised concerns with US President Biden regarding proposed credits for EVs and Buy American procurement plans. (Newswires)

Apple (AAPL) reached a key milestone in the development of processors for cars, while it accelerates car work and aims for fully autonomous vehicles. Furthermore, the new Apple Car head Kevin Lynch is pushing for a 2025 car debut and they are aiming for an autonomous car without a steering wheel and pedals. (Newswires)