By Lorcan Roche Kelly
China grows at slowest pace in decades, Brexit deal faces knife-edge vote, and Aramco delays IPO (again). Here are some of the things people in markets are talking about today.
China’s gross domestic product rose 6% in the three months to September, the slowest pace since the early 1990s, and below consensus forecast. A slowdown in investment was the main driver for the lower-than-expected number. Investors are looking to a meeting of the Communist Party’s top leadership, due in the coming days, for a possible review of stimulus measures. There is a feeling, however, that officials are allowing growth to run a little slower as they seek to clean up the financial system and deal with excess leverage. The country’s benchmark Shanghai Composite Index closed 1.3% lower in the wake of the data.
Having secured a Brexit deal in Brussels, British Prime Minister Boris Johnson will find out tomorrow if he can muster enough votes to get it through Parliament. With the Democratic Unionist Party refusing to support it, he’s relying on support from some opposition members and MPs he ejected from the Conservative Party. Everything is expected to be done and dusted by 2:30 p.m. London time. The back-and-forth of negotiations has led to a lot of volatility in the pound, and whatever the outcome tomorrow, that’s unlikely to change.
Saudi Aramco is again delaying its much-anticipated initial public offering. The postponement, which may be for as little as a few weeks, came after doubts emerged about the $2 trillion valuation placed on the company and will allow bankers to incorporate the company’s third-quarter results into their assessments of the oil producer. The decision comes as several smaller company initial offerings struggle or are cancelled, with businesses citing unfavorable primary market conditions.
Overnight the MSCI Asia Pacific Index slipped 0.2% while Japan’s Topix index closed 0.1% lower as the weaker-than-expected China growth numbers weighed on sentiment in the region. Europe’s Stoxx 600 Index was unchanged at 5:45 a.m. Eastern Time as investors digested weak earnings, with Renault SA dropping as much as 15% after cutting its full year forecast. S&P 500 futures point to a quiet start to the session, the 10-year Treasury yield was at 1.766% and gold was lower.
It is a quiet day on the economic data front, with only the U.S. September Leading Index at 10:00 a.m. and Baker Hughes rig count at 1:00 p.m. Dallas Fed President Robert Kaplan, Kansas City Fed President Esther George and Fed Vice Chairman Richard Clarida all speak later. U.S. tariffs on $7.5 billion of EU products come into effect today. Earnings season continues with Coca-Cola Co., American Express Co., and State Street Corp. among those announcing results.