Weak Eurozone GDP Report Sends the Euro Lower, Stock Markets Stabilize

Market Reviews

Commodity currencies are trading generally higher, led by Australian dollar. The US dollar is trading mixed. Meanwhile, euro and British pound remain the weakest major currencies, together with Japanese yen. German 10 year yield is up 0.0054 at 0.386. Italian 10 year yield is up 0.090 at 3.428. German-Italian spread is back above 300.

Stock markets in Asia and Europe stabilized. FTSE added 0.36%, DAX is flat, CAC gained 0.03%. Earlier today in Asia, Nikkei closed up 1.45% at 21457.29. Singapore Strait Times closed down 0.51% at 2966.45. Hong Kong HSI fell by 0.91% at 24585.53. China Shanghai SSE increased by 1.02% to 2568.05.

Eurozone has released a lot of economic data. Eurozone GDP growth slowed notably to 0.2% qoq in Q3, down from 0.4% qoq and missed expectation of 0.4% qoq. On annual basis, GDP growth slowed to 1.7% yoy, down from 2.2% yoy and missed expectation of 1.9% yoy. Italy Q3 GDP stalled, grew 0.0% qoq, slowed from prior 0.2% qoq and missed expectation of 0.2% qoq. French GDP rose by 0.4% qoq in Q3, accelerated from Q2’s 0.2% qoq, matched expectations.

Also released, Eurozone business climate dropped to 1.01, down from 1.21 and missed expectation of 1.15. Economic confidence dropped to 109.8, down from 110.9, missed expectation of 110.0. Industrial confidence dropped to 2.0, down from 4.7 and missed expectation of 3.9. Services confidence dropped to 13.6, down from 14.7 and missed expectation of 14.0. Consumer confidence was finalized at -2.7. That is, all confidence indicators deteriorated, and worse than expected.

German unemployment dropped -11k in October, unemployment rate was unchanged at 5.1%. Swiss KOF Economic Barometer dropped to 100.1 in October, down from 102.2 and missed expectation of 100.8.