“ECB Meeting …”

Source: Reuters

The European Central Bank left policy unchanged on Thursday resisting the pressure to unveil more stimulus amid a resurgence of coronavirus cases but provided a clear hint of fresh easing at its next meeting in December.  The ECB warned that the pandemic posed risks to economic growth and it would reassess whether more support is needed at its December 10 meeting when new projections become available.  The ECB set aside 1.35 trillion euros for bond purchases until mid-2021 and still has around 700 billion euros of that cash to spare.  This calms the markets even without a fresh commitment.   

German Unemployment

German unemployment dropped more than expected in October, data showed on Thursday as the labour market in Europe’s largest economy continued its recovery from the first wave of the coronavirus pandemic.  According to the labour office the number of people out of work fell by 35,000 in seasonally adjusted terms to 2,863 million.  The unemployment rate decreased to 6.2 percent in October from 6.3 percent in the previous month.  The number of people on short-time work schemes dropped to 2.58 million in August.  This compared to more than 4 million in the previous month and a peak of nearly 6 million reached in April at the peak of the pandemic. 

UK Retail Sales

Britain’s retail recovery came to a halt this month after several months of improvement, showed an industry survey on Tuesday.  The confederation of British industry’s (CBI) monthly gauge of retail sales fell to -23 in October, its lowest level since June, after hitting an 18-month high of +11 in September.  Retailers’ expectations for sales in November dropped sharply and they increasingly expect to cut orders to suppliers, showed the survey. 

China’s Industrial Firms

Profits at China’s industrial firms climbed for a fifth straight month in September, but at a slower pace as factory gate deflation and rising raw materials costs undercut a recovery in the manufacturing sector.

Oil

Oil prices added small gains on Tuesday after recent sharp losses, but sentiment remained subdued. On Wednesday oil prices went in reverse giving up on the gains reached the day before as a surge in US crude stocks and rising coronavirus infections in the US and Europe raised fears of a supply gut and weaker fuel demand.  Brent crude futures were down 2.9 percent at $40 a barrel after having climbed nearly 2 percent on Tuesday.  US crude was down 3.7 percent after a 2.6 percent jump in the previous day.  According to the American Petroleum Institute US crude oil and gasoline stocks rose last week, with crude inventories rising by 4.6 million barrels.  Furthermore, adding to pressure on oil markets, is the expectations of the Libya’s production to rebound to 1 million bpd in the coming weeks.  Oil prices tumbled by more than 6 percent to a five-month low on Thursday extending the previous day’s sharp decline due to the coronavirus lockdowns that could impact the demand for oil.  The December Brent crude futures were down 6.2 % at $36.70 their lowest in five months, whilst the more active January contract lost $2.33 a barrel to $37.31.  The Organisation of the Petroleum Exporting Countries and its allies will be monitoring the deteriorating demand outlook closely as well as the rising supplies from Libya the OPEC member. 

Currency Roundup

China’s yuan firmed on Tuesday but traded in a narrow range as market participants were cautious about the US election.   The gains on the dollar remained on Tuesday whilst other safe-haven currencies remained quiet as investors are set on investor’s next week’s US election.   The dollar rose against the euro amid prospects of a national coronavirus lockdown in France.  Against the safe-haven yen the dollar fell due to disappointment that the US has not as yet found a way to push through another round of fiscal stimulus.  The euro was down 0.4 percent at $ 1.1753 while the yen climbed 0.2 percent to 104.16 per dollar, its highest in more than a month.  On Thursday, sterling rose to a seven-week high against the euro before the European central bank meeting.  Against the euro the pound was up 0.3 percent at 90.22 pence per euro having touched its highest level since 9^th September. 

Market Wrap

German shares closed at their lowest in nearly four months on Monday as Europe’s most valuable tech firm SAP experienced its worst trading day in 24 years after cutting its outlook for 2020.  The German DAX dropped 3.7 percent after SAP dropped 22 percent after sending cautious message that its business would take longer than expected to recover from the pandemic.  Meanwhile new COVID-19 restrictions in Italy and Spain to control the spread of the pandemic weighed on the rest of Europe, with the pan-European STOXX 600 index closing at a one-month low of 1.8%.  The eurozone blue-chip index dropped nearly 3 percent while Europe’s travel and leisure sector which were worst hit by the movement curbs dropped 3.3 percent.  The S&P 500 hit three weeks low on Monday as record number of new coronavirus infections hit the US and some European countries and a lack of agreement in Washington over the next US fiscal stimulus raised worries about the economic recovery.

On Tuesday the Wall Street Fear gauge .VIX climbed after closing at its highest level in nearly two months amid concerns about President Donald Trump’s unexpected victory or the uncertainty over the election outcome.  Democratic challenger Joe Biden led the national polls, but the race in battleground states that determine the election outcome is much tighter.  On Tuesday US President Donald Trump acknowledged that a coronavirus economic relief package is likely to come after the presidential election, with the White House unable to bridge differences with fellow Republicans in the US Senate as well as congressional Democrats.  Eurozone bond yields held low as investors took a cautious stance.  Germany’s 10-year bond yield was unchanged at -0.58 percent in early trade.  European stocks dropped on Tuesday after a sharp decline in the previous session amid weakness in miners and automakers offset upbeat result from UK blue chip companies HSBC and BP.  UK FTSE 100 boosted by a 5.6 percent jump in Europe’s biggest bank HSBC after the lender indicated a pandemic-induced overhaul of its business model, accelerating plans to shrink in size and cost reduction.  Asian stocks dropped on Tuesday as investors were nervous about the global coronavirus cases that dampened the recovery outlook for US stimulus deal.  In Japan the benchmark Nikkei dropped 0.11 percent while Hong Kong’s Sang index. HIS was down 0.76 percent.  The sharp stock market decline set a bleak tone ahead of a busy third-quarter earnings season, with large US tech firms like Apple Inc, Amazon Google-parent Alphabet Inc Google set to report. 

Global shares slipped on Wednesday as coronavirus infections increased at an alarming pace in the US and Europe, while uncertainty over next week’s US elections.  European shares looked set to tumble amid reports of potential lockdowns in Germany and France.  Shares in Asia did better thanks in parts to more limited COVID-19 outbreaks.   European stock futures dropped to a fresh five-month low on Wednesday after a report France was considering a month-long national lockdown to combat a surge in coronavirus infections.  China shares ended higher for a second consecutive day on Wednesday as consumers and healthcare stocks gained amid hopes of further economic recovery from the pandemic.  At the close the Shanghai Composite index was up 0.46 percent at 3,269.24.  Stock markets tumbled on Wednesday after Europe’s economies imposed nationwide restrictions. 

Hong Kong stocks ended lower on Thursday after a rout on the Wall Street overnight, but losses were capped by gains for IT and industrials.  Meanwhile European stocks edged higher on Thursday after strong earnings reports from companies including Royal Dutch Shell and chip equipment supplier ASM.  Investor’s sentiment remained weak a day after a broad sell -off due to worries over lockdowns.  All eyes were on the European Central Bank on Thursday which was scheduled to announce its policy decision.  French leisure and travel stocks including Air France KLM and hotels company Accor dropped for the second consecutive day on Thursday as France introduced new lockdown measures. 

Malta:  Quarterly Accounts for General Government:  Q2/2020

In a press release dated 22 October 2020 the National Statistics Office showed that during the period April to June showed that the 2020 total revenue stood at EUR 1,086.3 million, a decrease of EUR 220 million when compared to the same quarter in 2019.  Decreases in revenue were registered in almost all categories, mainly due to the impact of the COVID-19 pandemic, with the largest being Taxes on production and imports (EUR 113.1 million) followed by Current Taxes on income and wealth (EUR 75 million) and Capital transfers receivable (EUR 36.7 million).  Other decreases were registered in Property income receivable and current transfers receivable.  These were offset by an increase in Net social contributions (EUR 9.2 million) and Market Output (EUR 5.7 million).

Meanwhile total expenditure in the second quarter of 2020 amounted to EUR 1,478.5 million, an increase of EUR 216.7 million over the corresponding quarter in 2019.  Increases in expenditure were recorded in Subsidies payable (EUR 121.1 million, mainly in relation to the COVID-19 Business Assistance Programme amounting to EUR 129 million.  Social benefits and social transfers in kind (EUR 66.9 million), Intermediate consumption (EUR 37.4 million, current transfers payable (EUR 34.2 million). Compensation of employees (EUR 18.8 million and Current taxes on income and wealth (EUR 0.1 million).  Meanwhile, gross capital formation and capital transfers payable registered a decrease of EUR 40.2 million and EUR 19.4 million, respectively.  A decline was recorded in Property income payable. 

Quarterly Debt

At the end of June, General Government debt stood at EUR 6,646 million, an increase of EUR 792.8 million over the corresponding quarter in 2019. 

Malta: Registered Unemployment: September 2020

In a press release dated 26 October 2020 the national Statistics Office said that Data provided by Jobsplus for September 2020 indicate a year-on-year increase of 1,576 persons registering under Part 1 and an additional 141 persons registering under Part II of the unemployment register.  Registered unemployment levels increased across all age groups.  The largest share of males and females on the unemployment register held occupations as clerical support workers, with 20.6 percent and 35.7 percent respectively.

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