Market Talk – October 29, 2019

ASIA:

According to Reuters, a US official has said that a lot of progress needs to be done in drafting the US-China deal and will not be ready in time for the meeting in Chile. “Our goal is to sign it in Chile. But sometimes texts aren’t ready. But good progress is being made and we expect to sign the agreement in Chile.” Meanwhile, China today accused the US of economic “bullying” after US officials said that they face security threats if they allow Chinese companies on their telecommunication networks.

The Hong Kong government has banned prominent Hong Kong activist Joshua Wong from running at the council elections, which raises more questions about the level of democracy in Hong Kong.

An Indian nuclear plant was apparently hit by a cyber attack today, with fears that the attack originated from North Korea.

The major Asian stock markets had a mixed day today:

  • Shanghai decreased 25.87 points or -0.87% to 2,954.18
  • Kospi decreased 0.91 points or -0.04% to 2,092.69
  • ASX 200 increased 4.70 points or 0.07% to 6,745.40
  • NIKKEI 225 increased 106.86 points or 0.47% to 22,974.13
  • Hang Seng decreased 104.50 points or -0.39% to 26,786.76
  • SENSEX increased 581.64 points or 1.48% to 39,831.84

The major Asian currency markets had a mixed day today:

  • AUDUSD increased 0.0027 or 0.40% to 0.6865
  • NZDUSD increased 0.0008 or 0.12% to 0.6355
  • USDJPY decreased 0.0360 or 0.03% to 108.9040
  • USDCNY increased 0.0031 or 0.04% to 7.0651

Precious Metals:

  • Gold decreased 3.49 USD/t oz. or -0.23% to 1,491.11
  • Silver decreased 0.015 USD/t. oz or -0.08%% to 17.8633

Some economic news from last night:

Japan:

  • Tokyo Core CPI (YoY) (Oct) remain the same at 0.5%
  • Tokyo CPI (YoY) (Oct) remain the same at 0.4%
  • CPI Tokyo Ex Food and Energy (MoM) (Oct) increased from -0.3% to 0.3%

EUROPE/EMEA:

Brexit has taken a back seat for now after members of parliament have voted to have an early election on December 12th. All the Major UK parties will now be working on their campaigns for December. UK Labour Jeremy Corbyn has already come out on his twitter account with a video calling for a real change. “A once-in-a-generation chance to rebuild and transform our country,” they have called it. Liberal Democrats are stating that they are the major party representing to remain in Europe and will have a manifesto to revoke the article 50. A December election will be the third general election within four years.

Russian Defense Minister Sergei Shoigu has told media that all the Kurdish forces have retreated from the “safe zone,” taking the Turkish-Russian operation ahead of schedule. “The withdrawal of armed forces from the territory where a safety corridor is supposed to be created has been completed ahead of schedule,” he said. The safe zone in Syria is designed to rehouse those millions of Syrian refugees who have fled to Turkey.

Russia, meanwhile, released some evidence of the US military smuggling oil out of Syria. The evidence includes satellite videos of oil being extracted, loaded onto trucks, and then being sent out of Syria for processing.

The major Europe stock markets had a mixed day today:

  • CAC 40 increased 9.58 points or 0.17% to 5,740.14
  • FTSE 100 decreased 25.02 points, or -0.34% to 7,306.26
  • DAX 30 decreased 2.09 points or -0.02% to 12,939.62

The major Europe currency markets had a mixed day today:

  • EURUSD increased 0.0010 or 0.09% to 1.1108
  • GBPUSD increased 0.0023 or 0.18% to 1.28850
  • USDCHF decreased 0.0006 or 0.06% to 0.9938

Some economic news from Europe today:

UK:

  • Nationwide HPI (YoY) (Oct) increased from 0.2% to 0.4%
  • Nationwide HPI (MoM) (Oct) increased from -0.2% to 0.2%
  • BoE Consumer Credit (Sep) decreased from 0.969B to 0.828B
  • M4 Money Supply (MoM) (Sep) increased from 0.4% to 0.7%
  • Mortgage Approvals (Sep) increased from 65.68K to 65.92K
  • Mortgage Lending (Sep) increased from 3.70B to 3.85B
  • Net Lending to Individuals remain the same at 4.6B

France:

  • French Consumer Confidence (Oct) remain the same at 104

Spain:

  • Spanish Retail Sales (YoY) (Sep) increased from 3.3% to 3.4%

Italy:

  • Italian PPI (YoY) (Sep) decreased from -1.4% to -1.7%
  • Italian PPI (MoM) (Sep) increased from -0.4% to 0.1%

US/AMERICAS:

Will the Federal Open Market Committee (FOMC) cut interest rates for the third time year? The markets have been pricing out a rate cut as it is largely believed the Fed will cite stagnant inflation, the ominous inverted yield curve, slowing manufacturing, and trade uncertainties as valid reasons for lowering rates. Based on past rate decreases, most analysts predict a cut of 25 basis points. Chairman Jerome Powell will make an official announcement on Wednesday at 2 PM EST.

Abu Bakr al-Baghdadi, leader of ISIS and America’s most wanted terrorist, died over the weekend after US Special Forces located him in northeast Syria. Today, President Trump announced that Baghdadi’s predecessor Abd ar-Rahman Mustafa al-Qaduli is also dead. US intelligence and military agencies hope that the loss of Baghdadi and Qaduli will help to further destabilize ISIS. Behind the curtain, there are whispers of potentially releasing the video footage of Baghdadi’s death as numerous reports from Iraq and Syria are questioning whether the ISIS leader’s death was a hoax. President Trump would like to release the video, stating, “[Baghdadi’s] followers and all of these young kids that want to leave various countries, including the United States, they should see how he died. He didn’t die a hero. He died a coward.”

In further US-Syria news, the White House plans to keep US troops on the ground to guard Syria’s oil reserves. Senator Lindsey Graham stated that this strategy will “deny Assad and Iran a monetary windfall,” further adding, “We can also use some of the revenues from future oil sales to pay for our military commitment in Syria.” However, some question whether the international community will consider this a war crime. Others question the true worth of Syria’s oil reserves. According to the 2018 International Energy Statistics survey, Syria ranked #75 in total petroleum and other liquids production.

House Democrats released an official resolution on impeachment draft this Tuesday. The House of Representatives will vote on the matter this Thursday.

US Market Closings:

  • Dow decreased 19.26 points or -0.07% to 27,071.46
  • S&P 500 decreased 2.53 points or -0.08% to 3,036.89
  • Nasdaq decreased 49.13 points or -0.59% to 8,276.85
  • Russell 2000 advanced 5.14 points or 0.33% to 1,577.07

Canada Market Closings:

  • TSX Composite advanced 30.61 points or 0.19% to 16,418.14
  • TSX 60 advanced 1.68 points or 0.17% to 983.07

Brazil Market Closing:

  • Bovespa declined 630.80 points or -0.58% to 107,556.26

ENERGY:

The IEA report that was released today suggest that unless global growth recovers, there will not be a sufficient demand for the current production and a large surplus will be built. Brent and WTI markets were trading slightly down for the day.

The oil markets had a mixed day today:

  • Crude Oil decreased 0.02 USD/BBL or -0.04% to 55.7422
  • Brent increased 0.29 USD/BBL or 0.47% to 61.8194
  • Natural gas increased 0.171 USD/MMBtu or 6.99% to 2.6211
  • Gasoline increased 0.0226 USD/GAL or 1.35% to 1.6985
  • Heating oil increased 0.0048 USD/GAL or 0.24% to 1.9706
  • Top commodity gainers: Natural Gas (6.99%),Gasoline (1.35%),Rice (1.04%), and Orange Juice (0.86 %)
  • Top commodity losers: Lean Hogs(-2.28 %), Ethanol(-1.85%), Coal (-1.52%), and Sugar (-1.91%)

The above data was collected around 13:00 EST on Tuesday.

BONDS:

Japan -0.11%(+3bp), US 2’s 1.64% (-1bps), US 10’s 1.84%(-2bps), US 30’s 2.33%(-2bps), Bunds -0.35% (-2bp), France -0.05% (-3bp), Italy 1.09% (-2bp), Turkey 12.79% (-5bp), Greece 1.25% (+2bp), Portugal 0.23% (-2bp), Spain 0.29% (-2bp) and UK Gilts 0.72% (-1bp).

  • Italian 6-Month BOT Auction increased from -0.224% to -0.213%