Positivity reigns supreme this morning and markets are buying everything (again).
Maybe it's fuelled by solid vaccine trials, maybe it's the signing of the world's largest regional free trade agreement?
“There’s just mountains of cash sitting on the sidelines, waiting to be put to work and since we’ve got this vaccine news, as well as diminished risk around the U.S. elections, all of this is flying into equities,” said Kyle Rodda, analyst at IG Markets. “Everyone’s thinking now that it’s the cue to get in.”
The ASX was halted due to 'market data issues'.
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In China, industrial output beat expectations again and retail sales continued to recover, albeit a little slower than expected.
China's factory output beats forecasts as Asia shakes off COVID slump
Industrial production climbed 6.9% in October from a year earlier, data from the National Statistics Bureau showed on Monday, in line with September’s gain and faster than the 6.5% rise expected in a Reuters poll of analysts.
The upbeat figures came as other Asian powerhouses also climbed out from their pandemic depths with Japan’s economy reporting its fastest quarterly growth on record.
Growth is expected to accelerate in the fourth quarter as the service sector recovery maintains momentum, Fu Linghui, spokesman of the National Statistics Bureau said, told reporters at a briefing.
In the consumer sector, retail sales rose 4.3% on-year, missing forecasts for 4.9% growth but still the fastest growth this year.
The improved appetite for spending was seen with China’s auto sales growing 12.5% in October, thanks to surging demand for electric vehicles.
Domestic tourism also saw a strong rebound over the Golden Week holiday last month, although levels were still well short of last year’s.
Fixed-asset investment rose 1.8% in January-October from the same period last year, compared with the 1.6% growth forecast and a 0.8% increase in the first nine months of the year.
China are recovering well, but Trump still has them in his sights. According to Axios;
Trump plans a last-minute China crackdown
President Trump will enact a series of hardline policies during his final 10 weeks to cement his legacy on China, senior administration officials with direct knowledge of the plans tells Axios.
Why it matters: He'll try to make it politically untenable for the Biden administration to change course as China acts aggressively from India to Hong Kong to Taiwan, and the pandemic triggers a second global wave of shutdowns.
Watch for National Intelligence Director John Ratcliffe to publicly describe in granular detail intelligence about China's nefarious actions inside the U.S.
Details: Trump officials plan to sanction or restrict trade with more Chinese companies, government entities and officials for alleged complicity in human rights violations in Xinjiang and Hong Kong, or threatening U.S. national security.
The administration also will crack down on China for its labor practices beyond Xinjiang forced labor camps.
But don't expect big new moves on Taiwan or more closures of Chinese consulates in the U.S., officials say.
National Security Council spokesperson John Ullyot told Axios, "Unless Beijing reverses course and becomes a responsible player on the global stage, future U.S. presidents will find it politically suicidal to reverse President Trump’s historic actions."
Behind the scenes: Senior administration officials are discussing expanding a Defense Department list of Chinese companies deemed to have ties to the Chinese military.
An executive order issued last week barred U.S. investment in 31 such companies, and any additions would likely face a similar restriction.
Officials plan to target China's growing use of forced labor in the highly competitive fishing industry. Coerced and unpaid labor isn't just a human rights concern — it can also give Chinese fisheries an advantage over rivals in an industry with geopolitical significance.
Trump officials have been looking to move more hawkish China experts into senior roles across the government, another senior official added.
What they're saying: "Director Ratcliffe will continue playing a leading role, in coordination with other national security principals, in delivering a necessary mindset shift from the Cold War and post-9/11 counterterrorism eras to a focus on great power competition with an adversarial China," DNI senior adviser Cliff Sims tells Axios.
Oil climbs higher on China, Japan rebound, hopes of OPEC+ supply curb
Oil prices climbed on Monday, recouping some losses from the previous session as hopes that OPEC+ will hold current output curbs offset concerns about weaker fuel demand due to rising COVID-19 cases and higher production from Libya.
Figures showing a rebound in the world’s second and third largest economies, China and Japan, also supported prices, along with data that Chinese refineries processed the most crude ever in October on a daily basis.
“Fundamentally China’s numbers do support why oil prices can keep at these levels,” OCBC economist Howie Lee said.
Both contracts gained more than 8% last week on hopes of a COVID-19 vaccine and that the Organization of the Petroleum Exporting Countries (OPEC) and their allies including Russia will maintain lower output next year to support prices.
The group, also known as OPEC+, has been cutting production by about 7.7 million barrels per day, with a compliance rate seen at 101% in October, and had planned to increase output by 2 million bpd from January.
OPEC+ is due to hold a ministerial committee meeting on Tuesday which could recommend changes to production quotas when all the ministers meet on Nov. 30 and Dec. 1.
However, the speedy recovery of oil production in Libya, an OPEC member, back to above 1.2 million bpd presents a challenge to OPEC+ cuts, while a slowdown in traffic across Europe and the United States dampened fuel demand recovery hopes this winter.
“European motorway traffic is down almost 50% in recent weeks in some countries (such as France) as lockdown measures are increased,” ANZ analysts said.
People movement on highways in the United States was also slowing based on vehicle mileage data despite authorities’ reluctance to implement new restrictions, they added.
While fuel demand is slowing, Baker Hughes’ data showed that the U.S. oil and natural gas rig count rose last week to its highest since May as producers, spurred by higher crude prices, return to the wellpad.
ANZ analysts expect the oil surplus to increase to between 1.5 million and 3 million bpd in the first half next year with a vaccine only boosting demand in the second half.
Japan's economy vaults back from COVID-induced recession, but outlook murky
Japan’s economy grew at the fastest pace on record in the third quarter, rebounding sharply from its biggest postwar slump, as improved exports and consumption helped the country emerge from the damage caused by the coronavirus pandemic.
However, analysts painted the sharp bounceback as a one-off from the depths of recession, and cautioned that any further rebound in the economy will be moderate as a resurgence in infections at home and abroad clouds the outlook.
The world’s third-largest economy expanded an annualised 21.4% in July-September, beating a median market forecast for an 18.9% gain and marking the first increase in four quarters, government data showed on Monday.
It was the biggest increase since comparable data became available in 1980 and followed a 28.8% plunge in the second quarter, when consumption took a hit from lock-down measures to prevent the spread of the virus.
“The strong growth in July-September was likely a one-off rebound from an extraordinary contraction caused by the lock-down steps,” said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
“The economy may not fall off a cliff. But given uncertainty over the outlook, I would err on the side of caution in terms of the pace of any recovery,” he said.
The rebound was driven largely by a record 4.7% surge in private consumption, as households boosted spending on cars, leisure and restaurants, a government official told a briefing.
External demand also added 2.9 percentage points to gross domestic product (GDP) growth thanks to a rebound in overseas demand that pushed up exports by 7.0%, the data showed.
But capital expenditure fell 3.4%, shrinking for a second straight quarter in a worrying sign for policymakers hoping to revitalise the economy with private-sector spending.
Nissan explores possible sale of 34% stake in Mitsubishi Motors: Bloomberg
Nissan Motor is looking to sell some or all its 34% stake in Mitsubishi Motors, Bloomberg News reported on Monday, citing unidentified sources, a move that would reshape a three-way alliance that includes France's Renault.
PNC nears deal to buy BBVA's U.S. banking arm for more than $10 billion: sources
PNC Financial Services Group Inc is nearing an all-cash deal to buy the U.S. business of Spanish lender BBVA for more than $10 billion, further consolidating the U.S. banking sector, people familiar with the matter said on Sunday.
It would be the second-largest U.S. banking deal since the 2008 financial crisis and create a U.S. bank with nearly $560 billion of assets and a presence in two dozen states.
We've already had the main events on today's calendar, so we can look forward to a day of central banker platitudes.
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