|Day's range||5,286.80 - 5,400.20|
|52-week range||4,402.50 - 7,197.20|
There was a bloodbath in the Australian stock market as traders swamped the Australian Stock Exchange with sell orders on the final day of the year, wiping $20 billion off the benchmark S&P;/ASX 200 Index in the first fifteen minutes of trading.
Attacks on Saudi oil fields drove demand for the Yen and the Loonie as oil prices surged. Johnson is in focus later today and the GBP needs progress.
While there are no stats due out today, the markets will continue to be sensitive to any trade war chatter. There’s also Italy to factor in.
“At present, we do have some external pressures, but those external pressures will help us boost our self-reliance in innovation and accelerate the pace of high-speed development,” said Liu, who is also the lead negotiator in the U.S.-China trade talks.
Once again, it appears that U.S. investors have been largely shielded from the worsening effects from the tariffs that have weakened other countries. Additionally, domestic GDP rose 2.9% in 2018 and 3.1% in the first quarter of 2019, inflation has been subdued and the labor market has held up for the most part.
With most major indexes in Asia and the U.S., for that matter, trading marginally up or down, the steep drop in Hong Kong’s Hang Seng Index stands out. For stock traders, Hong Kong’s continuing attractiveness as a base for international business is increasingly being questioned.
U.S. President Trump and Chinese President Xi Jinping may meet at this month’s G-20 meeting, but based on China’s trade balance report, there doesn’t appear to be any urgency to strike an immediate deal to end the trade dispute. Friendly trade negotiations could begin, but it’s starting to look like China is willing to extend the tariffs into the 2020 elections as it bets on the opportunity to negotiate with a new administration.
This week’s stock market performance, in the wake of the on-going trade dispute between the United States and China, and the new tariffs on Mexico, clearly shows that investors are counting on the Fed and to a lesser-extent, the European Central Bank to cut rates or provide additional stimulus measures sooner than previously thought.
Aside from a punchy increase in US consumer confidence, I am not sure we heard news in European/US that we hadn’t already heard and interpreted in Asia yesterday. However, the US reaction was certainly vastly different from how Asia traded yesterday and there has been a clear bid in safe-haven assets.
On Monday, President Trump said the U.S. was “not ready” to strike a deal with China, before adding he expected one in the future. He also said tariffs on Chinese imports could go up “substantially.” Traders read the comments as bearish because they certainly don’t indicate both sides are moving closer to a trade deal.
Trump’s trip to Japan ended with no major trade deal being reached. This was not a surprise since the trip seemed to focus more on pomp and circumstance than resolving deep issues on trade. Traders also felt the markets would continue to trade rangebound because broad market sentiment remained uncertain ahead of a possible meeting between the Chinese and U.S. presidents at the G20 summit next month.
The Greenback is on the move early, while the EUR and GBP are under pressure. Today’s stats and chatter from the administration will drive the majors.
The early weakness in Asia appears to be a reaction to Wednesday’s performance on Wall Street. Shares in the U.S. were under pressure all session after U.S. Treasury Secretary Steven Mnuchin essentially said trade talks had stalled with no new negotiations scheduled. This made investors nervous because it dampened hopes of a speedy resolution to the trade war.
The RBA talks of rate cuts to pin back the Aussie Dollar as trade war jitters linger. Another quiet day on the stats leaves geopolitical risk in focus.
China is down, but U.S. futures are up early Monday. This is causing a little confusion for traders after sources told CNBC on Friday that scheduling discussions for further trade talks have been put on hold since U.S. President Donald Trump’s administration has increased scrutiny of Chinese telecom companies.
Although China has not announced any retaliatory moves against the U.S. in reaction to the move against Huawei, U.S. firms still took a hit in anticipation of a drop in business. Qualcomm was down 4%, Micron was nearly 3% lower, and semiconductor firms Qorvo and Skyworks were down 7% and 6%, respectively.
A sense of calm in the forex markets early on as the U.S futures point to a positive open in the equity markets. It could all change in a second…
Trump hits the markets early with the threat of a hike in tariffs and the prospect of more. The latest tweets will distract the markets from the stats.
The BoE and UK local elections will put the Pound in focus. Stats out of the Eurozone and the U.S and trade talks will also need to be considered.
It’s all eyes on personal spending and inflation figures out of the U.S this afternoon. With the FED delivering on Wednesday, will today’s figures influence?