Friday's Financial Focus

Advies Financial Focus Friday's Financial Focus from Advies Wealth Management...Exports help Spain emerge from two-year recession ... Russia cheers China deals... Bullish Bank of England minutes raise chance of early rate hike...

Shares resume upward trend on China data but slip overnight
Overnight, Asian markets failed to extend the momentum seen in the US, as concerns of a liquidity squeeze in China worried investors. Yesterday, global equity markets had resumed their recent upward trend, boosted by signs of growth in Chinese manufacturing, while the euro rose to afresh two-year peak against the dollar. On Wall Street, the S&P 500 index was on track for its tenth gain in the past 12 sessions as expectations forsteady accommodative monetary policy for the foreseeable future offset a mixed batch of earnings and economic data. The benchmark index closed at a record onTuesday. Boosting investors' appetite for risky assets was data showing growth in China's vast factory sector reached a seven-month high this month, easing concerns about a slowdown in Chinese exports, which would point to weakening global demand.

Bullish Bank of England minutes raise chance of early rate hike
The Bank of England’s interest rate-setting panel said on Wednesday that slack in the labour market is eroding faster than expected, with the UK economy continuing to improve. Minutes from the latest meeting of the Bank’s monetary policy committee (MPC) raise the prospect of rates being lifted sooner than late 2016 – the point at which its forecasts had suggested a hike would befeasible. New governor Mark Carney has introduced rules to hold rates at their historic lows until unemployment falls to at least 7% – but that time may come earlier than the Bank had expected.

US trade deficit increases in August
The US trade deficit widened slightly in August to $38.80bn, from July's figure of$38.64bn (revised from $39.15bn). Analysts expected that it would fall to $39.50bn. Paul Ashworth, chief US economist at Capital Economics, says the deficit suggests "that net external trade had a neutral impact on overall third-quarter GDP growth", which Capital Economics estimate was near 2%annualised. Exports fell by a trivial 0.1% from July to August, although, as Ashworth points out, the decline would have been even worse without a 5.5% July to August jump in automotive exports.

US jobless claims drop by 1200 following shutdown and glitches
Before theUS government shutdown, computer issues in California were playing havoc with jobless claim numbers. Now that the political squabbles have been dealt with (at least temporarily) the statisticians still have to deal with that backlog. So we've seen a lot of revisions in this week's release - and that might be atrend for a while longer. The US Department of Labour says that initial jobless claims dropped from 362,000 (revised from 358,000) to 350,000 in the week ended19 October. That's a miss on estimates of a drop to 340,000. Continuing jobless claims drop to 2.874m from 2.882m (revised from 2.859m) in the week ending 12 October.

EU bank shares dive on tough stress test plan
Banks across Europe took a beating from investors on Wednesday as the authorities announced a higher than expected capital target for lenders. Even British banking stocks tumbled, despite this round of tests not being applied to UK institutions. TheEuropean Central Bank (ECB) is testing the biggest 130 banks in the Eurozone to study the quality of their assets and to make sure they have enough capital. The process will take around a year, and was backed up by ECB boss Mario Draghi warning banks that he is not afraid to fail them if they do not meet the targets.

Russia cheers China deals
Russian energy companies signed a slew of deals with China this week, seeking to lock in sales to fund costly production and pipeline projects that will direct exports away from Europe to Asia. The agreements, announced during a visit by Prime Minister Dmitry Medvedev to Beijing, brought Igor Sechin, chief executive of state oil major Rosneft, closer to his goal of exporting more than 1m barrels per day (bpd) of oil to China. Independent gas producer Novatek secureda long-term contract to supply liquefied natural gas, ahead of the expected lifting of state-controlled Gazprom’s export monopoly on LNG exports next year.

Output boost again for UK's car factories
Car manufacturers saw another bumper month in September, with production up by over 12,000 units, 9.9% higher than the same month last year. Figures released today by the Society of Motor Manufacturers and Traders (SMMT) show the dramatic improvement in the industry. The UK’s factories churned out 140,88 cars last month, pushing the sector’s rolling 12 month output to 1.5m for the first time since October 2008, before the UK’s recession began.

Exports help Spain emerge from two-year recession
Spain has finally escaped from two years of recession according to data released Wednesday by the Eurozone state’s central bank. Spanish GDP edged up by 0.1% during July to September, the Bank of Spain has estimated. Yet output in the third quarter was still 1.2% lower than a year earlier, it said. Broader economic recovery may be behind the improvement in Spain’s fortunes, with exports fuelling the lift in GDP. Exports during January to August this year were up 6.6% from January to August compared to a year earlier, separate data from the country’s economy ministry showed on Wednesday.

Football Focus: Business giants join forces to launch Indian Super League
Following months of speculation, Reliance Industries, IMG Worldwide and Star India on Monday announced the launch of an Indian Super League competition, which aims to become a catalyst for the growth of the sport in India. The league aims to revolutionise the sport in India, leveraging the strengths of all three partners who are focused on growing the game to national prominence, offering Indian football greater global exposure and eventually helping the national team qualify for the 2026 FIFA World Cup. Reliance, India’s largest business enterprise, the IMG Worldwide agency and Star India, a broadcast subsidiary of media company 21st Century Fox, will each own three equal stakes in the league.The Economic Times newspaper said Star India initially considered acquiring solely the broadcast rights to the league, but will now pay Rs20 billion (US$325.3 million) for equity and broadcast rights for 10 years, from 2014 to2023. The Times of India newspaper said that the deal is more likely to be worth Rs15 billion ($244 million).