August 5, 2019

Daily Market Review – Monday, August 5, 2019

Daily Market Review – Monday, August 5, 2019

Asia

Markets this morning continue to reel from US President Trump’s announcement Thursday of additional tariffs on all Chinese imports. Indexes across the region are blood-red, led by the Hang Seng’s -2.93%, this as the island enters a week of general strikes amidst growing threats from the mainland of imminent interference. The Yen is up 0.64% as investors rush to safe-haven assets, and the Yuan lost a percent and a half, leaving it at an 11-year low against the USD, with the People’s Bank’s blessing. Services PMIs in both China and Japan failed this morning to fulfil expectations. Meanwhile, on the Korean/Japanese front, Japanese car sales in South Korea have slumped by a third since the dispute between the two nations began on WW-2 war reparation demands.

Europe

The pound seems to have stemmed its decline lately (a week) and is now trading in a narrow 1.2110-1.2200 range as renewed calls for the Eu to reconsider its Brexit deal hardball stance before a no-deal move becomes a reality. After the BoE maintained interest rates at 0.75% on Thursday, Markit’s construction PMI failed to fulfil expectations. The Eurozone saw an impressive increase in retail sales, but a halving off June’s PPI to 0.7% in June. Manufacturing PMIs the day before shows a slight improvement in July to 46.5, despite continued drops in France and Germany.

US

With reports from the White House indicating anything but a wall-to-wall consensus over Trump’s tariff increase, markets ended significantly down on Friday – the Nasdaq leading with a 1.32% drop. The DJIA has lost more than 1000 points since Thursday. Jobs data as last week ended were less than impressive, with jobless claims increasing significantly in July and Friday’s NFP retreating to 175K. June’s trade surplus managed to shave off $0.1bn but failed to deliver the billion-plus cut expected. ISM New York delivered a contractionary 43.5 index reading in July, and both June’s factory orders and the Michigan consumer sentiment index were disappointing.

Commodities

Oil plunged nearly $4 on the barrel following Trump’s trade-war escalating tweet Thursday and despite a further 6-rig count in the Baker Hughes Friday report, as the emerging pressure on the economies is stifling demand amidst the world’s 2 largest oil consumers. The commodity has since regained half that after Iran seized yet another oil tanker – this time, Iraqi – and WTI crude is currently completing a downward bounce below the $59 threshold. Gold similarly jumped by $40 the ounce on Trump’s announcement, putting it at a 6-year high.

Corporate

As it prepared to release its quarterly earnings report this morning (UK time), HSBC announced an end to its CEO’s 18-month tenure. The continuing US-China trade war, political pressure in Hong Kong and an easing in monetary policy led now by the FED’s latest rate cut are all eating into the profits of a bank that owes its existence to Euro-Sino trade. Shares were down by more than 1% in Hong Kong, despite a 15.8% increase YoY in revenues and a 6-cent increase in earnings per share, also year-on-year. Also reporting today, Disney, following its pre-streaming service shopping spree and layoff cycle. EPS is expected to increase 9% QoQ and revenues, 42% YoY. Another UK-based bank doing well is Barclays’, which reported a 20% increase in dividends despite a £400mn drop in profits. In automotive, BMW earnings fell despite an uptick in electric car sales, while truck sales upped GM profits in Q2 by 1.6%. And back to oil, Exxon (down 1.02%) Friday beat expectations, as did Chevron (-0.01%) – both not managing to up stock prices due to the political-economic environment. Finally, Berkshire Hathaway Saturday reported a 17% increase in net earnings YoY.

Economic Calendar

Today’s Top Economic Events
TIME/PLACE RELEASE/DATA
08:00 AM GMT – EU Markit Services & Composite PMI (Jul). Sentix Investor Confidence (Aug) at 08:30
08:30 AM GMT – UK Markit Services PMI (Jul). BRC Like-For-Like Retail Sales (Jul) at 23:01
13:45 PM GMT – US Markit PMI Composite & Services (Jul). ISM Non-Manufacturing PMI at 14:00. Total Vehicle Sales (Jul) at 19:30.
22:45 PM GMT – NZ Unemployment, Participation Rate and Labour Cost Index (Q2). Inflation Expectations at 03:00 (+1).
23:30 PM GMT – Japan Overall Household Spending & Labour Cash Earnings (Jun). Coincident & Leading Economic Index (Jun) at 5 AM GMT (+1)
01:30 AM GMT (+1) – Australia Imports, Exports & Trade Balance (Jun). Interest Rate Decision at 04:30.

For more, visit our Economic Calendar