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ICBC Global Financial Market Daily Review--Oct 14
 

I. Yesterday's News
1. The number of Americans filing for unemployment benefits held at a 43-year low last week, pointing to sustained labor market strength that could pave the way for the Federal Reserve to raise interest rates in December. Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 246,000 for the week ended Oct. 8, the lowest reading since November 1973, the Labor Department said. In a second report, the Labor Department said import prices gained 0.1 percent last month after declining 0.2 percent in August. In the 12 months through September, import prices fell 1.1 percent, the smallest decrease since August 2014, after declining 2.2 percent in August.

2. The Federal Reserve may want to hold off on monetary policy changes until after the U.S. presidential election on Nov. 8, Philadelphia Fed President Patrick Harker said on Thursday. Fed officials normally take pains to distance themselves from electoral politics, and Harker's comments were an unusual admission that the Fed might need to craft policy based on who wins the White House. Harker will not vote at the Fed's Nov. 1-2 policy meeting but will participate in its discussions. Harker said the Fed should raise rates once by the end of this year. He will have a vote on rate policy at the Fed's 2017 meetings.

3. The United States has asked the World Trade Organization to establish a dispute settlement panel "to examine china's unfair export restraints" over 11 raw materials, United States Trade Representative Michael Froman said in a statement on Thursday. The raw materials include antimony, chromium, cobalt, copper, graphite, indium, lead, magnesia, talc, tantalum and tin, Froman said, adding that pursuing the action on behalf of U.S. workers in the steel, auto, aerospace and other affected industries.

4. Thailand's King Bhumibol Adulyadej, the world's longest-reigning monarchn, died in hospital on Thursday. He was 88. A palace statement did not give a cause of death. The king's son, 63-year-old Crown Prince Maha Vajiralongkorn, is expected to become Thailand's new king. Thailand is unlikely to face major economic disruption after the death of revered King Bhumibol Adulyadej, although many people in the country will be grief stricken, some risk analysts and diplomats said.

5. 2015 saw a pause as total billionaire wealth fell fell 6 percent due to headwinds such as the transfer of assets within families, commodity price deflation and an appreciating US dollar, according to the UBS/PwC Billionaires Report. Led by China, Asia produces one billionaire every three days, over half of which come from China. Total billionaire wealth declined by $300 billion to $5.1 trillion while average billionaire wealth fell from $4.0 billion to $3.7 billion. Headwinds such as commodity price deflation and an appreciating US dollar, have impacted the growth of billionaire wealth. Among the 210 new billionaires created globally in 2015, the US only added a net five billionaires. In contrast, Asia produced one billionaire every three days, with China alone accounting for over half of the 113 additions.

6. OPEC reported a increase in its oil production in September to the highest in at least eight years and raised its forecast for 2017 non-OPEC supply growth, pointing to a larger surplus next year despite the group's deal to cut output. The Organization of the Petroleum Exporting Countries pumped 33.39 million barrels per day (bpd) last month, up 220,000 bpd from August, OPEC said in a monthly report on Wednesday. The figures underline OPEC's challenge in seeking to restrain supplies for the first time since 2008 to curb a persistent supply glut and prop up prices.

II. Market Overview
FX
The dollar tumbled from a seven-month high on Thursday, as risk appetite took a turn for the worse after soft Chinese trade data spooked a market that is expecting an interest rate increase from the Federal Reserve by the end of the year. The dollar index posted its largest daily percentage loss in a month. In late trading, the dollar index fell 0.4 percent to 97.538. The dollar was last down 0.5 percent against the yen at 103.61 yen. The U.S. currency last changed hands at 0.9863 versus the Swiss franc, down 0.4 percent. The euro fell briefly below $1.10 for the first time since July, but quickly recovered to trade 0.4 percent higher on the day at $1.1052.

Precious Metals
Gold prices edged higher on Thursday as the dollar declined and world shares slipped following renewed worries about China's economy. Spot gold rose to $1,257.49 an ounce, while U.S. gold futures settled up 0.3 percent at $1,257.60.

Commodities
1.Crude Oil
Oil prices settled up on Thursday after a U.S. government report showing hefty draws in diesel and gasoline offset the first crude inventory build in six weeks. Brent crude settled up 22 cents, or 0.4 percent, at $52.03 per barrel. U.S. crude ended up 26 cents, or 0.5 percent, at $50.44.

2. Base Metals
Copper prices slipped almost three percent earlier on Thursday, after China's September trade data showed a sharp decline in imports, raising new concerns about demand in the world's biggest user of metals. Three-month copper on the London Metal Exchange closed down 2.1 percent at $4,712 a tonne, having earlier fallen to a one-month low of $4,687. Three-month zinc fell to its lowest in almost four weeks at $2,210 a tonne, before closing down 1.1 percent at $2,241.

U.S. Treasuries
U.S. Treasury prices rose on Thursday as weak Chinese data pushed investors to buy safe-haven government debt after two straight days of selling. The 10-year note rose 12/32 in price to yield 1.739 percent. The 30-year bond rose 22/32 in price to yield 2.476 percent, its lowest since Oct. 7.

Stock Market
1. U.S. Equities
U.S. stocks slipped on Thursday led by falls in financial shares and following weak Chinese economic data but a late-day rebound in oil prices limited the day's decline. The Dow Jones industrial average was down 45.26 points, or 0.25 percent, to 18,098.94, the S&P 500 lost 6.63 points, or 0.31 percent, to 2,132.55 and the Nasdaq Composite dropped 25.69 points, or 0.49 percent, to 5,213.33.

2. Hong Kong Equities
Hong Kong shares fell on Thursday after China's September trade data showed a sharp decline in exports, raising fresh concerns about the trajectory of the world's second-biggest economy and its currency the yuan. The Hang Seng index fell 1.6 percent, to 23,031.30, the biggest one-day loss since Sept. 30. The China Enterprises Index lost 1.8 percent, to 9,496.85 points.


(2016-10-26)
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