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Global Daily: German business confidence falls slightly in October

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Financial Markets

Global stock-market rally cooled on Monday as European and U.S. stocks markets were not matching the best of the gains posted in Asia, where China’s surprise interest-rate cut added momentum to the recent rally.  China’s Shanghai Composite index climbed 0.5 percent to the highest level in two months. In contrast, Europe’s Stoxx 600 index fell 0.2 percent, after surging 2 percent on Friday, and U.S. equities traded lower as well with the S&P 500 index sliding 0.2 percent in morning session, after last week erasing its losses for the year.

Argentine bonds and stocks soared after the pro-business candidate forced a run-off presidential election next month in Sunday’s vote, prompting speculation that the next president will take steps to support the economy and bring the country back to the international debt market.  Argentina’s defaulted dollar bonds due 2033 jumped 5 points to an eight-year high of 110 cents on the dollar, while the country’s Mervel stock index climbed as much as 5 percent in morning trading.

High Income Economies

The IFO Business Climate Index of business confidence in Germany dipped slightly to 108.2 in October from 108.5 the previous month (the indicator ranges from -100 to 100, where zero indicates neutrality), falling for the first time in four months.  Sentiment remains resilient and exceeded expectations despite concerns about the slowdown in China and the Volkswagen scandal.

Producer prices in Spain fell by 3.6 percent (y/y) in September, the biggest drop since December 2014.  Energy prices decreased by 14.2 percent, and prices of intermediate goods were 0.9 percent lower.

Singapore industrial production contracted for the eighth consecutive month, falling by 4.8 percent in September (y/y), after a 7.1 percent drop in August. The decrease was led by electronics, transport engineering, and precision engineering.

Developing Economies

East Asia and Pacific

Thailand's exports declined at a slower-than-expected pace of 5.5 percent (y/y) in September, less than the 6.7 percent drop in August.  Meanwhile, imports plunged 26.2 percent, more-than expected.  The visible trade surplus grew notably to $2.8 billion in September from $721 million in August.

Latin America and the Caribbean

Falling for the sixth consecutive month, Brazil's consumer confidence index fell 0.8 percent (m/m) to 75.7 in October from 76.3 in September, survey figures from the Getulio Vargas Foundation, FGV showed Monday.  The current situation index decreased by 2.1 percentage points to 65.7 in October from 67.1 in September.  Meanwhile, the expectations index remained stable at 81.1 in October, the lowest in the series.

Sub-Saharan Africa

Angola launched its first Eurobond with the aim of raising $1.5 billion for long-term economic development.  The sovereign was rated Ba2 by Moody's and B+ by Standard & Poor's and Fitch.  According to the Finance Ministry, the issuance could enhance Angola's transparency in the management of its public accounts and better manage the state's financing costs.  The country has suffered from the lower price of crude and has seen its currency drop by more than 30 percent against the dollar this year.

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