Market Talk – July 16, 2019

ASIA:

President Trump said today that there is a long way to go to reach the conclusion to this US-China trade deal. Additionally, there is a possibility of adding tariffs on another 325 billion USD worth of goods. China, meanwhile, has added another member to the negotiating team – the current minister Zhong Shan who is seen as a hardliner in China. Zhong further made a statement stating that the US has provoked economic and trade issues against us and violated WTO principles.

The UK Guardian newspaper has urged Europe to back Taiwan in the Chinese-Taiwan conflict. The paper stated that China’s treatment of HK nationals illustrates the nation as a threat to democracy.

Trump targeted Google, saying that his administration will look into the alleged links between Google and China. This response from Trump is after billionaire techie Peter Thiel asked whether senior management considered itself to have been infiltrated by Chinese spies. Thiel also questioned Google’s decision to work with the Chinese military.

The major Asian stock markets had a mixed day today:
• Shanghai decreased 4.57 points or -0.16% to 2,937.62
• Kospi increased 9.39 points or 0.45% to 2,091.87
• ASX 200 decreased 12.00 points or -0.18% to 6,641.00
• NIKKEI 225 decreased 150.65 points or -0.69% to 21,535.25
• Hang Seng increased 64.74 points or 0.23% to 28,619.62
• SENSEX increased 234.33 points or 0.60% to 39,131.04

The major Asian currency markets had a mixed day today:
• AUDUSD decreased 0.0023 or 0.33% to 0.7016
• NZDUSD decreased 0.0013 or 0.19% to 0.6704
• USDJPY increased 0.4320 or 0.40% to 108.3320
• USDCNY increased 0.0094 or 0.14% to 6.8821

Precious Metals:
• Gold decreased 9.73 USD/t oz. or -0.69% to 1,405.18
• Silver increased 0.225 USD/t. oz or 1.46% to 15.6121

Some economic news from last night:
New Zealand:
• CPI (YoY) (Q2) increased from 1.5% to 1.7%
• CPI (QoQ) (Q2) increased from 0.1% to 0.6%
• RBNZ Offshore Holdings (Jun) decreased from 51.30% to 50.30%

Some economic news from today:
New Zealand:
• GlobalDairyTrade Price Index increased from -0.4% to 2.7%

EUROPE/EMEA:

It is not all doom and gloom in the UK, as the data shows that UK wage growth accelerated and the jobless rate is the lowest since 1974. Boris Johnson, who is the clear leader in early polls for the next PM role, is considering suspending the parliament in the run-up to Brexit in order to close off any escape routes on road to a no-deal Brexit. Boris Johnson ruled out supporting the US in possible military action in Iran, with foreign secretary and running mate for the PM also cautious of triggering an accidental war.

Ursula von der Leyen used the gender card as she called for European MPs to back her as the first female president for the European Commission. “We represent half of our population. We want our fair share,” she announced to the commission.

The US fears that Iran may have seized a UAE based tanker in the Strait of Hormuz. The tanker entered Iranian waters two days ago and has had its tracker turned off ever since. Meanwhile, Iran’s foreign minister has suggested for the first time that the ballistic missile program could be up for debate with the U.S. Talks may open as tensions remain high between Tehran and Washington over the collapsing nuclear deal. Previously, they had requested that the US halt all arms sales to Saudi and the UAE.

The major Europe stock markets had a green day today:
• CAC 40 increased 36.17 points or 0.65% to 5,614.38
• FTSE 100 increased 45.48 points or 0.60% to 7,577.20
• DAX increased 43.63 points or 0.35% to 12,430.97

The major Europe currency markets had a mixed day today:
• EURUSD decreased 0.00491 or -0.44% to 1.12079
• GBPUSD decreased 0.01046 or -0.84% to 1.24094
• USDCHF increased 0.0041 or 0.42% to 0.9886

Some economic news from Europe:

Italy:
• Italian Trade Balance (May) increased from 2,851B to 5,347B
• Italian Trade Balance EU (May) increased from 0.97B to 2.25B
• Italian CPI (MoM) (Jun) decreased from 0.2% to 0.1%
• Italian CPI (YoY) (Jun) decreased from 0.8% to 0.7%
• Italian HICP (YoY) (Jun) remain the same at 0.8%
• Italian HICP (MoM) (Jun) remain the same at 0.1%

UK:
• Average Earnings ex Bonus (May) increased from 3.4% to 3.6%
• Average Earnings Index +Bonus (May) increased from 3.2% to 3.4%
• Claimant Count Change (Jun) increased from 24.5K to 38.0K
• Employment Change 3M/3M (MoM) decreased from 32.0K to 28.0K
•Unemployment Rate (May) remain the same at 3.8%

Germany:
• German ZEW Current Conditions (Jul) decreased from 7.8 to -1.1
• German ZEW Economic Sentiment (Jul) decreased from -21.1 to -24.5

Eurozone:
• Trade Balance (May) increased from 15.7B to 23.0B
• ZEW Economic Sentiment decreased from -20.2 to -20.3

U.S./AMERICAS:

President Trump announced this Tuesday that there is a “long way to go” in terms of finalizing a U.S.-China trade deal. The two countries agreed to cease further tariffs until negotiations recommenced, however, Trump stated that he would not be opposed to increasing tariffs on another $325 billion worth of goods. China allegedly agreed to purchase more U.S. agriculture products, but that did not occur and has caused tensions to resurface.

Facebook’s cryptocurrency aspirations came under harsh scrutiny before the Senate Banking Committee. Republican Senator Martha McSally flatly told the company that she does not trust them. Democratic Senator Sherrod Brown said that Facebook’s numerous scandals, namely involving leaking private user data to third parties, is evidence that the company can’t be trusted. “We’d be crazy to give them a chance to let them experiment with people’s bank accounts,” Brown avowed. Facebook executive David Marcus pleaded that Libra, the proposed cryptocurrency, and Facebook will have “separate social and financial data.”

Charles Evans, the president of the Chicago Fed, announced in an interview with CNBC this Tuesday that he would “feel confident in arguing for a couple of rate cuts before the end of the year.” Evans, who happens to be a voting member of the Federal Open Market Committee (FOMC), said that inflation alone should warrant a rate cut. The marketplace seems to be bidding for a rate cut as well. The FOMC is set to deliberate at the next policy meeting on July 30-31 where an official decision is expected to be made.

President Trump stated this Tuesday that the Dow’s all-time intraday high (27,398.68) indicates more than just breaking a record. “That means jobs for this country. It’s all about jobs,” the president stated. The pessimistic sentiment regarding trade with China caused the Dow, and other major indexes, to trade lower as the day commenced.

U.S. Market Closings:
• The Dow declined 23.53 points or -0.09% to 27,335.63
• S&P 500 declined 10.26 points or -0.34% to 3,004.04
• Nasdaq declined 35.39 points or -0.43% to 8,222.80
• Russell 2000 advanced 0.17 points or 0.01% to 1,562.00

Canada Market Closings:
• The TSX Composite declined 8.40 points or -0.05% to 16502.42
• The TSX 60 declined 0.04 of a point or 0.00% to 986.62

Brazil Market Closing:
• Bovespa declined 27.28 points or -0.03% to 103,775.41

ENERGY:

The announcement earlier in the day by Secretary Pompeo over the willingness of Iran to come to the negotiation table regarding ballistic missiles caused Crude oil to fall more than 3%. The EIA report was released showing the fifth straight weekly decline in US crude supplies, however, this did little to halt the slide in prices.

The oil markets had a negative day today:
• Crude Oil decreased 1.57 USD/BBL or -2.64% to 57.8983
• Brent decreased 1.62 USD/BBL or -2.44% to 64.7360
• Natural gas decreased 0.092 USD/MMBtu or -3.82% to 2.3194
• Gasoline decreased 0.0248 USD/GAL or -1.28% to 1.9062
• Heating oil decreased 0.0374 USD/GAL or -1.92% to 1.9172

• Top commodity gainers: Steel (9.73%), Orange Juice (3.41%), Silver(1.27%), and Palm Oil (0.92%)
• Top commodity losers: Lumber (-7.61 %), Coffee (-4.32%), Natural Gas (-3.86%), and Crude Oil (-2.90%)

The above data was collected around 15:17 EST on Tuesday.

BONDS:
Japan -0.12%(-0bp), US 2’s 1.86% (+3bps), US 10’s 2.12%(+3bps), US 30’s 2.64%(+3bps), Bunds -0.29% (+0bp), France 0.00% (-1bp), Italy 1.61% (-3bp), Turkey 16.79% (+9bp), Greece 2.25% (-6bp), Portugal 0.55% (-4bp), Spain 0.50% (-1bp) and UK Gilts 0.81% (+1bp).
• Spanish 3-Month Letras Auction decreased from -0.476% to -0.518%
• US 52-Week Bill Auction decreased from 1.985% to 1.915%