Asia

Asia Factory Sector Upbeat, Led By China. Asian manufacturing activity picked up in October led by China, where factory sector growth hit its fastest pace in 18 months off the back of new orders, purchasing managers' reports showed on Friday. China's official purchasing managers index (PMI) rose to 51.4 in October, up from 51.1 in September and above expectations for a reading of 51.2. A PMI reading above 50 suggests expansion from the previous month, while a figure below 50 points to contraction. The HSBC/Markit PMI for South Korea showed factory activity expanded for the first time in five months. Factory activity in major exporter Taiwan, key to many global tech supply chains, was running at its fastest pace since March 2012, an HSBC/Markit PMI showed. Japan reported on Thursday that its factory activity grew at the fastest pace in more than three years as the Markit/JMMA PMI rose to a seasonally adjusted 54.2, adding to hopes that the world's third-largest economy and home to big brand names like Sony and Toyota is pulling out of two decades of stagnation. (Reuters)

Indonesia Trade Deficit Remains A Concern. Indonesia's trade deficit narrowed in the third quarter as the country's imports slowed due to weaker domestic demand and a weakening rupiah. The country posted a trade deficit of US$2.9 billion in the July-September period, narrowing from US$3.1 billion in the second quarter, according to data released by the Central Statistics Agency (BPS) last Friday. Still on a monthly basis, the trade balance swung to a US$660 million deficit in September - surprising most analysts - after a surplus of a revised US$71 million in August. The deficit had reached a record high of US$2.3 billion in July. (Business Times)

S. Korea Records Strong Oct Exports. South Korean exports last month handily beat expectations to set a record and the manufacturing sector had its best month in five – affirming a nascent global recovery and improving the prospects of sustained growth. Overseas shipments by grew 7.3% in October from a year earlier to US$50.5bil led by increased demand for mobile phones, cars and chips from the US and European markets, government data showed on Friday. (Reuters)

China Services Index Rises To Year’s High In Rebound Sign. China’s Communist Party leaders will enter a policy-making summit this week with the economy on an upswing, services and manufacturing surveys show. A non-manufacturing Purchasing Managers’ Index rose to the highest level this year in October, a government report showed yesterday. The increase follows faster-than-estimated growth in two manufacturing indexes last week. The non-manufacturing PMI rose to 56.3 in October from 55.4 in September, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday. A number more than 50 indicates an expansion. (Bloomberg)

USA

US Manufacturers Shake Off Effect Of Budget Impasse. Manufacturing unexpectedly picked up in October as American companies shook off the impact of the federal government shutdown. The Institute for Supply Management’s index rose to 56.4, the highest since April 2011, from 56.2 a month earlier, the Tempe, Arizona-based group’s report showed today. Readings above 50 indicate growth. Economists in a Bloomberg survey called for a decline to 55. (Bloomberg)

Fed To Test Banks For Interest Rate Rise, Housing Collapse. The Federal Reserve said it will examine how the biggest banks might react to a jump in long-term interest rates and another housing crash as it released the next round of stress-test scenarios designed to monitor the ability of the U.S. financial system to withstand economic shocks. The central bank mentioned that as part of two adverse scenarios it will gauge bank resilience against declines in the prices of high-risk, high-yield loans and debt and some highpriced real estate markets around the country, according to a statement released in Washington today. The central bank also inserted a test for large trading and clearing banks on counterparty default. (Bloomberg)

US Public Investment Falls To Lowest Level Since War. Public investment in the US has hit its lowest level since demobilisation after the second world war because of Republican success in stymieing President Barack Obama’s push for more spending on infrastructure, science and education. Gross capital investment by the public sector has dropped to just 3.6 per cent of US output compared with a postwar average of 5 per cent, according to figures compiled by the Financial Times, as austerity bites in the world’s largest economy. Republicans in the House of Representatives have managed to shrink the US state with their constant demands for spending cuts, even though their uncompromising tactics have exacted a political price, with their approval ratings in Congress at record lows. (Financial Times)

Europe

Spain’s Outlook Revised To Stable By Fitch. Fitch Ratings raised its outlook on Spain’s rating to stable from negative, saying the nation’s overhaul of banks has “advanced well” and financing conditions have improved. The company affirmed its BBB rating in a statement in London yesterday, leaving the country at the second-lowest investment grade. Spain has improved its “policy track record,” with improvements to its labor market, pension system and budget, it said. (Bloomberg)

UK Manufacturing Continues 'Solid' Growth. UK manufacturing continued to grow strongly in October, making a "solid start" to the final quarter of the year, a closely-watched survey says. The latest Markit/CIPS Purchasing Managers' Index (PMI) for the sector was 56.0 last month, down slightly from September's revised figure of 56.3 but still indicating robust growth. A figure above 50 indicates expansion. (BBC)

U.K. Growth Forecasts Raised By Cbi As Recovery Builds Momentum. The Confederation of British Industry raised its forecasts for U.K. economic growth and said it expects business investment and trade to aid the recovery starting next year. The business lobby sees the economy expanding 1.4 % this year and 2.4 % in 2014, it said in a quarterly report today. That’s up from 1.2 % and 2.3 % projected in August. The London-based group also said that unemployment -- which the Bank of England has set as the key indicator for its guidance on policy -- will fall to 7.2 % by the end of 2015 from its current 7.7 %. (Bloomberg)

Currencies

Euro Tumbles More Than 2% Vs. Dollar On Week. The euro slumped against the dollar Friday, netting a weekly loss of 2.3%, as below-1% inflation in the euro area reinvigorated discussion about a possible rate cut from the European Central Bank. The euro tumbled to $1.3487 from $1.3587 in late North American trade Thursday. The ICE dollar index, a gauge of the greenback’s strength against six currencies, rose to 80.744 from 80.221 late Thursday. In other action, the British pound fell to $1.5922 from $1.6038 late Thursday, while the Australian dollar bought 94.34 U.S. cents versus 94.56 U.S. cents. The dollar rose to 98.77 yen from ¥98.32 on Thursday. (Market Watch)

Commodities

Brent Sheds Nearly $3 On Strong Dollar, Spread Narrows. Brent oil fell sharply on Friday, tumbling by nearly $3 a barrel, and settling at its lowest point since early July, narrowing its premium to U.S. crude in heavy selling. Brent crude for December delivery settled down $2.93 at $105.91 a barrel, a loss of 2.7 %, its largest daily percentage loss since June 20. The last time Brent settled lower was on July 4 at $105.54. U.S. oil for December fell $1.77 to settle at $94.61, posting a fourth straight week of losses and its longest losing streak since June 2012. It was the lowest settlement price for the U.S. contract since June 21 at $93.69. (Reuters)

Gold Falls, Posts Sharp Weekly Drop On Fed Worries. Gold fell about 1 % on Friday, posting its biggest weekly loss in seven weeks, as renewed anxiety about the U.S. Federal Reserve could scale back its bond-buying stimulus prompted bullion investors to reduce positions. Spot gold was down 0.9 % at $1,311.50 an ounce by 2:57 p.m. EDT (1857 GMT), extending Thursday's 1.4 % slide. Spot gold has ended lower every day this week. Spot silver was down 0.4 % to $21.76 an ounce. It had fallen 3.5 % on Thursday, its biggest one-day loss in a month. Among the platinum group, platinum inched down 26 cents to $1,448.24, while palladium edged up 0.2 % to $736.51 an ounce. (Reuters)