Equities Boosted by US GDP, Firm Dollar
ActionForex | Oct 31, 2014 02:54AM ET
US equities jumped sharply overnight as boosted by the stronger than expected GDP report, which showed 3.5% annualized growth comparing to consensus of 2.9%. DJIA rose further 221.11 pts, or 1.3% to close at 17951.42, comparing to record high of 17350.64 made in September. S&P 500 rose 12.35 pts, or 0.62% to close at 1994.65 comparing to record high of 2019.26, also made in September. Asian stocks followed with Nikkei up 1.75% at the timing of writing and is marching back to 16000 handle. Hong Kong HSI is also up over 0.7%. US Dollar Index rebounded to ahead high as 86.49 yesterday, just shy of recent resistance of 86.74, before retreating mildly. In the currency markets, dollar stays firm against other major currencies and is still on course to retest recent highs, including 1.2500 in EUR/USD, 1.5876 in GBP/USD, 0.9688 in USD/CHF and 110.08 in USD/JPY.
In Japan, it's reported that the USD 1.2T Government Pension Investment Fund, or GPIF, will raise foreign investments holdings from 23% to 40%. That includes 25% of overseas stocks and 15% of bonds and is significantly higher than market's expectation of around 30% in total. Local stock holdings will be raised to 25% and domestic debt holding would be lowered to 35%. Some analysts noted that the reduction of domestic debt holdings to less than 40% was a surprise. Released from Japan, national CPI core slowed to 3.0% yoy in September, with ex-sales tax reading at 1.0% yoy. Tokyo CPI core slowed to 2.5% yoy in October. Household spending dropped -5.6% yoy in September. Unemployment rate rose to 3.6% in September. Released from Australia, PPI closed to 1.2% yoy in Q3. New Zealand building permits dropped -12.2% mom in September.
In Europe, ECB said it had chose Deutsche Bank, ING, State Street and Amundi to support its ABS purchase operations. It's expected that the central bank will start the program in November and the "executing asset managers' role will be to conduct the eligible ABS purchase transactions on explicit instructions from, and on behalf of, the Eurosystem, which will undertake price checks and due diligence prior to approving the transactions." From UK, Gfk consumer sentiment dropped to -2 in October versus expectation of -1. Gfk said that the period of improvement in sentiments "seems to have run completely out of steam".
Looking ahead, BoJ will announce rate decision and Japan will release housing starts. Eurozone will release unemployment rate and CPI. Canada will release GDP. US will release personal income and spending, employment cost index, Chicago PMI and U of Michigan sentiment.
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