Macro Roundup (Sep 30)

SHANGHAI, Sep 30 (SMM) – This is a roundup of global macroeconomic news on Friday and what is expected in the week ahead.

Friday night

The US dollar held onto three-week highs against a basket of its rivals on Friday, supported by quarter-end rebalancing flows and after the release of mixed economic data.

Markets are also digesting the impeachment probe into US President Donald Trump and the latest headlines from the trade dispute between Washington and Beijing.

Oil prices slid after Iranian President Hassan Rouhani claimed Friday that the US offered to remove all sanctions on Iran in exchange for negotiations. President Donald Trump and the State Department later denied those claims, causing oil to rebound from the lows.

LME base metals closed mixed on Friday, after data showed a contraction in China’s industrial profits in August. Zinc rose 0.8%, copper advanced 0.7%, and aluminium inched up 0.1%, while nickel dipped 0.2%, lead fell 0.8% and tin declined 1.5%.

SHFE base metals, except for copper and zinc, traded lower on Friday night. Tin dropped 1.2%, aluminium shed 0.3%, lead lost 0.1%, and nickel edged down 0.02%.

CNBC reported on Friday that the White House is discussing ways to curb US financial exposure in China, including a block of all American investment in the country, though the source familiar with the matter cautioned that the discussion was still in early stages.

Profits at China’s industrial companies dropped 2% in August from a year earlier to 517.8 billion yuan, reversing the previous month’s brief gain of 2.6%, data from the National Bureau of Statistics (NBS) showed Friday.

The decrease in August mainly resulted from the slowing growth in industrial production and sales, the expanding decline in the prices of industrial products, and other adverse factors like typhoons, said NBS senior statistician Zhu Hong.

For January-August, industrial firms earned profits of 4.02 trillion yuan, down 1.7% year on year, the same as the reading in the first seven months.

In the US, consumer spending consumer spending barely rose in August, suggesting that the economy’s main growth engine was slowing after accelerating sharply in the second quarter.

The Commerce Department said on Friday consumer spending, which accounts for more than two-thirds of US economic activity, edged up an adjusted 0.1% in August from July, when spending rose a downwardly revised 0.5%. On a year-over-year basis, consumer spending was up 1.4% in the second quarter.

Excluding the volatile food and energy components, consumer prices as measured by the personal consumption expenditures (PCE) price index edged up 0.1% last month after rising 0.2% in July. That lifted the annual increase in the so-called core PCE price index to 1.8% in August, the biggest gain since January, from 1.7% in July.

US government data also showed orders for US-made non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, dropped 0.2% last month after a stagnation in July.

An index of US consumer confidence rose to 93.2 in September from 89.8 in August, according to the University of Michigan.

The number of active drilling rigs in the US fell by eight to 860 in the week ending September 27, down 194 rigs year on year, according to Baker Hughes.

European data released on Friday were gloomy, as eurozone economic sentiment came in at its weakest since February 2015, sinking from 103.1 in August to 101.7 in September.

Week ahead

Chinese markets will close from October 1-7 for the National Day holiday.

Factory activity data from China, the US and the eurozone as well as the US jobs report for September are among the highlights in the week ahead.

Other data slated for release next week include German and Euro-area retail sales, unemployment rate and consumer prices, US durable goods orders and factory orders. Weekly data including US crude inventory and jobless claims will also be published.  

The week ahead will also bring a heavy slate of Federal Reserve speakers, who may offer clues on the central bank’s next move.