June 13, 2019

Daily Market Review – Thursday, June 13, 2019

Daily Market Review – Thursday, June 13, 2019

Asia

The Hang Seng continues to slide this morning as protests continue in Hong Kong against the proposed extradition law, this as both the Shanghai and Shenzhen Composites show a slight improvement.

Chinese Vice Premier Liu He this morning said the government would increase economic support to bolster growth in the face of US pressures. Disappointing new loans and consumer inflation data yesterday indicate the need for further monetary easing, this alongside slowing manufacturing.

Concurrently, China this morning launched its STAR market Tech Board – a channel for listing on China’s stock exchanges that will free applicants from regulatory interference in IPO matters, such as pricing. Despite attempts to open the Chinese markets and facilitate trade, companies are still reluctant to list there.

In Japan, with the Yen rising 0.13% overnight on risk aversion, the Ministry of Economy, Trade and Industry’s domestic services index increased by 0.8% in May after contracting by 0.2% in April; while in Australia, consumer inflation in June is expected to remain high at 3.3% while unemployment continues to disappoint at 5.2% in May. The participation rate, on the other hand, increased 2 ticks to 66% and full-time employment increased by 2.4K, following April’s 6.3K contraction.

Europe

European indexes returned most of the week’s gains yesterday, the CAC40 losing 0.62%, the FTSE 0.40% and the DAX 0.36%. After ECB President Mario Draghi yesterday admitted that global trade was facing headwinds at an ECB conference, this morning’s consumer inflation reading in Germany stubbornly remained steady at 1.4% YoY in May.

Adding to the pressure, the Euro continues its 2-week climb as policymakers seek ways to ignite a sluggish economy and domestic demand and curb the zone’s dependence on an export-economy.

Yesterday’s 10-year bond auction offered a continuing negative yield, now at -0.24%, breaking the September 2016 low of -0.11%. Meanwhile, in the UK, the Royal Institution of Chartered Surveyors published a much better than expected 10% contraction in housing prices, this up from April’s -22%.

The pound is at a 3-week high, after Labour said it would introduce anti-no-deal Brexit legislation next week. And topping the cream is the European commission’s executive report yesterday that an inordinate number of financial firms have not yet opened subsidiaries in Europe in preparation for a no-deal Brexit.

According to Reuters, “national regulators across the EU have been told by Brussels they cannot soften requirements on staffing new hubs to lure business from London.”

US

US indexes were also in refund mode yesterday, the Nasdaq losing nearly 0.4% after Reuters reported that Huawei is hitting back against US carrier Verizon with a $1bn claim for licensing fees on the Chinese manufacturer’s patents.

Verizon spokesman Rich Young said that the issue “has implications for our entire industry and also raise(s) national and international concerns.”

In economic news, consumer inflation in the US is showing signs of stagnation, as May’s reading at 1.8% YoY is 2/10th below last month, and the Federal Government disappointed with a $208bn.

Budget deficit in May, this down from March’s $160bn surplus. Mortgage applications, on the other hand, shot up for the June 7th reading to 26.8% from the previous 1.5%.

Commodities

Oil continues to bounce off 5-month lows today, after yesterday’s EIA reading of a 2.2mB increase to inventories for the week ending June 7th. Given the lack of any follow-through plans to the alleged G20 meeting between US and Chinese leaders, demand sentiment is falling.

And while continues to edge upwards, now struggling to regain the 1341 foothold, Bitcoin yesterday broke through resistance, defining 8100 as daily support.

Economic Calendar

Today’s Top Economic Events
TIME/PLACE RELEASE/DATA
07:30 AM GMT – Switzerland SNB Interest Rate Decision, Monetary Policy Assessment and Financial Stability Report
09:00 AM GMT – EU Industrial Production (Apr)
12:30 PM GMT – US Continuing & Initial Jobless Claims (Jun 7), Export & Export Price Index (May), and 4-wk & 30-yr bond auctions at 15:30
12:30 PM GMT – Canada New Housing Price Index (Apr)
22:30 PM GMT – NZ Business PMI (May), and Food Price Index (May) at 22:45
04:30 AM GMT (+1) – Japan Industrial Production and Capacity Utilization (Apr)

For more, visit our Economic Calendar