With a slowing economy and fears of rising unemployment, Australia this morning lowered its central bank’s interest rate by 25bP to an historical low of 1%. The AUD, which had already priced in the move, dipped 20 pips momentarily and returned to regain a third of its weekend losses. Meanwhile, the government is collecting votes to pass far-flung tax cuts. With the post-G20 exuberance over, Asian equities seem to have settled just under the half-way mark from losses over their 3-month highs. The Nikkei this morning shows a 0.04% gain, Chinese markers straddling the 0-mark and only the Hang Seng starring with a 1.3% rise, despite soldiers facing off with protesters who yesterday stormed the Hong Kong parliament. While its media continues to ignore the riots, China’s President Li Keqiang said overnight that the government would be ending ownership limits on financial service companies and some manufacturing sectors (including motor vehicles) for foreigners. Despite the 2-week rise of the Yuan, which has now settled above support at 0.146, Li said he would not resort to devaluating the currency. And, this morning, a commerce ministry official said that less companies were moving offshore to contend with US import restrictions than had previously been feared.
The FTSE 100 led European gains yesterday with a 0.97% increase, buoyed by global markets reacting to the reopening of trade talks between China and the US. Manufacturing PMIs from across the region were weak to disappointing, with only France above the contraction line at 51.9. The UK’s 48 came in alongside worse-than-expected consumer credit and mortgage approval indexes, while the EU’s unemployment data shows a 1/10th improvement to 7.5% in May. After PM contenders Hunt & Johnson expressed over-willingness for a no-deal Brexit, Chancellor of the Exchequer Philip Hammond yesterday warned that such an eventuality would deplete the nation’s budgetary resources. Meanwhile, Reuters reports that the Federation of Small Businesses shows investment at a 2-year low.
US equities reacted mutedly yesterday to the global Xi-Trump fanfare, the DOW eking out a mere 0.44% and the Nasdaq 100 – 1.06%. US manufacturing data for June came in a bit better than expected, Markit measuring a 1-tick increase to 50.6 and ISM’s down to 51.7 on expectations of 0.7 points less. Construction spending decreased by 0.8% in May after a 0.4% increase the month before.
As gold shows a possible willingness to accept support at 1385, oil last night jumped 80 cents a barrel on OPEC’s agreement to extend oil cuts for another 8 months, in flagrant disregard for US President Trump’s demands for increased Saudi supply in return for military support against Iran. Reuters reports that Shale oil delivery this year is expected to drop by about 200K barrels per day from 2018’s high – another reason for OPEC to cut supplies in order to maintain prices. The commodity is currently locked into a daily pendant converging upon the $59 region. Meanwhile, the UK said it and its partners would be considering its reaction to Iran’s surpassing its uranium enrichment quota. And, while bitcoin trading continues to decline from last week’s $13k high, the US Commodity Futures Trading Commission (CFTC) has approved ErisX, another crypto derivatives provider, to offer futures contracts on Cryptos.
|08:30 AM GMT – UK||Markit Construction PMI (Jun). BRC Shop Price Index (May) at 23:00|
|09:00 AM GMT – EU||Producer Price Index (May)|
|12:55 PM GMT – US||Redbook Index (Jun 24), ISM-NY Business Conditions Index at 13:45, and Total Vehicle Sales (Jun) at 19:30.|
|13:30 PM GMT – Canada||Markit Manufacturing PMI (Jun)|
|20:30 PM GMT – OIL||API Weekly Crude Oil Stock (Jun 28)|
|01:30 AM GMT (+1) – Australia||Building Permits (May), Exports, Imports & Trade Balance (May)|
|01:45 AM GMT (+1) – China||Caixin Services PMI (Jun)|