Market Snapshot
Asia: Japan +1.9% to 17722. Hong Kong closed. China closed. India +0.25% to 26221.
Europe: London +1.3%. Paris +1%. Frankfurt +0.2%.
Futures: Dow +0.6%. S&P +0.6%. Nasdaq +0.8%. Crude +2.3% to $46.12. Gold -0.3% to $1112.20.
Ten-year Treasury Yield flat at 2.06%.
Economic News
Auto sales
7:30 Challenger Job-Cut Report
8:30 Initial Jobless Claims
9:45 Bloomberg Consumer Comfort Index
9:45 PMI Manufacturing Index
10:00 ISM Manufacturing Index
10:00 Construction Spending
10:30 EIA Natural Gas Inventory
2:30 PM Fed’s Williams: Economic Outlook
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
Markets
Chinese factory activity continued to contract in September, albeit at a slightly slower pace, two surveys show. The government NBS Manufacturing PMI edged up to 49.8 from 49.7 in August, while the Caixin manufacturing PMI rose to an expected 47.2 from 47. The contraction of Chinese manufacturing and the slowdown in the wider economy has caused much vexation but isn’t this what is needed to help compensate for the massive oversupply that we’re told about?
Eurozone manufacturing PMI declined to 52 in September from 52.3 in August as German expansion softened but France returned to growth. “Despite unprecedented central bank stimulus and substantial currency depreciation, the eurozone manufacturing sector is failing to achieve significant growth momentum and even risks stalling again,” Markit says.
The Federal Reserve has become embroiled in an insider-trading investigation following the leak of sensitive information in 2012, the WSJ reports. The Commodity Futures Trading Commission is looking at whether the law was broken when a firm called Medley Global Advisors told its clients details about the Fed’s plans for further economic stimulus. Medley, which is owned by the Financial Times, argues that it is a media organization and so has special legal protections.
President Barack Obama has signed into law a bill that extends federal funding until December 11 after the Senate and the House yesterday passed the proposal, as expected. Had Congress not approved the measures, the government would have shut down today, the first day of the new fiscal year. Republicans and Democrats now have around ten weeks to formulate a long-term budget, with the parties looking to strike a two-year deal.
Stocks
The EU has sent a “statement of objections” to Ball (NYSE:BLL) over its $6.6B purchase of Rexam (REXFF) as part of a probe into whether the deal will lead to higher prices of cans. Ball now has to come up with proposals, such as asset sales, to allay the regulatory fears.
Global equities continued where they left off yesterday and were higher at the time of writing despite tepid manufacturing PMI data out of China and Europe. Still, Chinese PMI did improve even if manufacturing continued to contract, raising hopes that the slump is bottoming out. In Europe, a rebound in mining stocks – no doubt aided by a recovery in Glencore (GLCNF) (see below) – and gains in the automotive sector have helped boost shares.
Looking to reduce its massive debt, Glencore (GLCNF) is in discussions with sovereign-wealth funds and Asian trading houses about selling up to a third of its agricultural business, which could be valued at $12B, the WSJ reports. Glencore is also in negotiations over $1.5B in streaming deals in which the company would sell the rights to future royalties from its gold and silver operations. Shares have pretty much recovered from their 29% rout on Monday.
Volkswagen is worried about its credit rating following recent action from Fitch and Moody’s, Reuters reports, and is considering cutting costs and revenue-generating measures in order to solidify the rating. The fear is that a downgrade would cause VW’s (VLKAF) borrowing costs to rise at a time in which it expects to spend billions of euros as a result of the diesel-emissions scandal. However, VW isn’t considering any asset or brand sales just yet.
HP is selling at least $14B worth of debt through its HP Enterprise unit, which is set to become a standalone publicly traded company on November 1 along with the HP Inc PC/printing unit. The HP (HPQ) parent company will use the proceeds to redeem up to $8.85B in debt and refinance other obligations.
Deere and the United Auto Workers union have reached a tentative agreement to replace the six-year master labor contract that ended at midnight last night. The deal is for another six years and will now go to a vote of the 10,000 Deere (DE) manufacturing staff that the UAW represents.
Walmart is reportedly planning to lay off hundreds of workers, including senior managers, at its headquarters in Arkansas. The retailer is looking to limit the effect of the costs associated with a hike in the wages of store workers and investment in other areas of its business, such as its pickup service for online grocery orders. Between 18,000 and 19,000 people work at Walmart’s (WMT) HQ.
Google and Microsoft have ended a long-running patent spat involving about 20 suits in the U.S. and Germany. Microsoft (NASDAQ:MSFT) had alleged that Google’s (GOOG, GOOGL) former Motorola Mobility unit infringed its IP. Google, which held onto most of Motorola’s patents following its sale to Lenovo, alleged that Xbox consoles infringed its patents. Now they’ve made nice with each other, Google and Microsoft plan to cooperate on various patent issues.