China’s planned economic and social reforms sent shares on the Shanghai Composite index up by over 2.8% in the overnight trading session. Shares surged ahead in Hong Kong too, where the Hang Seng was up over 3.3% in late trading. Chinese President Xi Jinping’s blueprint for economic reforms over the coming decade helped push Greater China markets higher. The reforms included; handing more control over the pricing of water, electricity and natural resources to the markets, liberalising the interest rate and currency regime, shaking up the welfare system to encourage labour movement and revamping the rules for stock market flotations and relaxing the state’s control on farmland.
Early days of Help to Buy fail to halt usual pre-Christmas fall in new UK seller asking prices according to the UK’s Rightmove website
The much heralded help to buy scheme in the UK, where the UK govt. will provide a 15% deposit on a house valued up to £600K, has so far failed to capture UK home buyers’ attention, twinned with this lenders are still attaching strict lending criteria despite the govt. guarantees. Whilst it’s still too early to predict if the help to buy scheme has failed what is for sure is that UK house prices nationally, whether asking prices or selling prices actually achieved, haven’t moved substantially once London is stripped out of the data.
One in four potential home-movers unaware of Phase Two extension, some of whom have not heard of Help to Buy at all. Bubble-preventing Mortgage Market Review bares teeth as estate agents report few Help to Buy mortgage applications have so far been approved. Flat and terrace listing numbers hold up, a sign of greater choice for first-time buyers? Underlying market recovery and building momentum for 2014 highlighted by: 4% annual growth in asking prices is the highest seen in November since 2007. Stock per estate agency branch drops to 67 properties from 71 properties this time last year. Rightmove traffic since September’s Help to Buy announcement up 30% compared to same period in 2012.
Fed ponder Volcker rule amendment
The Federal Reserve are considering a one year delay to the Volcker rule, pushing the compliance date out to July 2015. Banks are currently required to comply with the rule, which bans proprietary trading that puts a bank’s own capital at risk, by July 2014. But regulators are still putting the final touches on the long-delayed proposal and the final rule will probably not be released until December, giving banks less than a year to make changes to comply with the proposal.
Euro area balance of payments in September 2013
The seasonally adjusted current account of the euro area recorded a surplus of €13.7 billion in September 2013. This reflected surpluses for goods (€13.7 billion), services (€7.6 billion) and income (€2.5 billion), which were partly offset by a deficit for current transfers (€10.1 billion). The seasonally adjusted 12-month cumulated current account for the period ending in September 2013 recorded a surplus of €196.5 billion (2.1% of euro area GDP), compared with a surplus of €100.0 billion (1.1% of euro area GDP) for the 12-month period up to September 2012.
Market snapshot at 10:00 am UK time
The CSI 300 closed up 3.33%, the ASX 200 closed down -0.31%, the Hang Seng closed up 2.73%, whilst the Nikkei closed the day flat. European indices are mixed, the FTSE is flat, STOXX down 0.16%, CAC down 0.11%, DAX down 0.-17%.
The DJIA equity index future is down 0.04%, SPX down 0.09% and the NASDAQ down 0.05%. NYMEX WTI oil is down 0.34% at $93.52 per barrel, with NYMEX nat gas up 0.93% at $3.69 per therm.
Forex focus
The U.S. Dollar Index, which monitors the greenback versus its 10 major counterparts, fell 0.2 percent to 1,015.38 early in London, set for a closing level similar to Nov. 6th. The dollar was little changed at $1.3497 per euro after touching $1.3507, the weakest since Nov. 7th. The U.S. currency dropped 0.2 percent to 99.95 yen after rising to 100.44 on Nov. 15th, the strongest level since Sept. 11th. Japan’s currency gained 0.2 percent to 134.90 per euro after depreciating to 135.40, the weakest since Oct. 30th.
The pound traded at $1.6134 early in London after reaching $1.6143, the highest since Oct. 29th. The U.K. currency gained 0.6 percent versus the dollar last week. Sterling was at 83.63 pence per euro. The pound strengthened 3.2 percent in the past three months, the best performer of the 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indices. The euro rose 1 percent, while the dollar dropped 0.4 percent.
The Aussie jumped 0.4 percent to 94.03 U.S. cents late in Sydney, while New Zealand’s dollar appreciated 0.3 percent to 83.61 U.S. cents. The kiwi was at NZ$1.1248 per Aussie after climbing for five-straight days to NZ$1.1236 at the end of last week. It reached NZ$1.12 on Aug. 1st, the strongest since October 2008.
Bonds
The Debt Management Office in the UK plans to sell 3.75 billion pounds of 10-year government bonds on Nov. 19th and 4.75 billion pounds of securities due in 2019 on Nov. 21st. Gilts lost 2.9 percent this year through Nov. 15th. German bonds dropped 1.1 percent and U.S. Treasuries declined 2.3 percent.
