July 18, 2019

Daily Market Review – Thursday, July 18, 2019

Daily Market Review – Thursday, July 18, 2019

Asia

Japan has refused to attend the 2nd round of talks with South Korea on its export controls, which it introduced following the latter’s demand for compensation for WW-2 war victims. Japanese exports last night show a 6.7% drop in June (for the 7th month in a row) and imports – a 5.2% reduction. With business sentiment at a low, Reuters reports senior Japanese officials saying that they are hard at work with US counterparts on a trade agreement covering agricultural access to Japanese markets in return for lowered cars tariff in the US.

Europe

Falling producer prices and growing no-deal Brexit concerns strained the pound yesterday, which hit a 2-year low. The Euro, on the other hand, bounced off support at 1.1260, confirming a sideways trend on either side of 1.1290, as most polled analysts expect the zone’s central bank to cut interest rates in September. The ECB meets next Thursday to discuss the matter. Yesterday Consumer Price Index shows a tenth point improvement to 1.3% in June – still, well below par. And markets closed in the red on a 0.3% drop in construction output (Eurostat) and a 7.8% reduction in car sales, according to the European Automobile Manufacturers Association.

US

Congress has rejected an $8 bn arms deal with Saudi Arabia based on the country’s flagrant flaunting of human rights issues, primarily the murder of a journalist in Turkey – US resident Jamal Khashoggi. Trump has said he would veto the decision, reiterating that the US is being “ripped off” in global trade. The EU, he said, was even tougher than China in its negotiations. US housing data shows a 2nd month of falls in building permits and starts in June, this despite low mortgage rates. The dollar index yesterday lost 30 cents after the IMF said it was overvalued, based on “economic fundamentals”.

Commodities

Oil yesterday retraced 75 cents on the barrel following a 3.1mB drawdown in the EIA’s report. It returned to its downtrend, swiftly shedding nearly $2 after a rise in oil products indicated weakening demand. Bitcoin hit support at 9157 yesterday as G7 officials in France said regulatory issues would have to be addressed before Facebook would be able to release its crypto, which France’s Bruno Le Maire called a threat to national sovereignty. Meanwhile, Reuters reports that Japan has initiated an international cryptos payment messaging system, not unlike the SWIFT banking network.

Corporate

Microsoft yesterday announced “an extensive, multiyear alliance” with AT&T in the fields of artificial intelligence and 5G, as its cloud activities take centre stage in business revenues. On the earnings front, Netflix shares yesterday lost 12% on missed earnings. Revenues increased to $2.92 bn on expectations of 4.93 as price increases generated the first loss of customers in 8 years. Ahead – Disney+ in November… IBM beat expectations thanks to a 5% growth in its cloud business. Revenues, however, were down 4% YoY. eBay surpassed estimates thanks to increased advertising revenues. Bank of America reported a less-than-expected 2% increase in revenues; and German data processor, SAP reported a 21% decline in Q2 profits due to increased one-time investments. Following a less-than stellar performance on its Prime Day sale this week and ahead of its quarterly earnings report next Thursday, Amazon is under anti-trust investigation by the EU. The company is being accused of providing preferential treatment to retailers based on data agreements.

Economic Calendar


Today’s Top Economic Events
TIME/PLACE RELEASE/DATA
08:30 AM GMT – UK Retail Sales (Jun) and Credit Conditions Survey (Q2)
12:30 PM GMT – US Continuing & Initial Jobless Claims, and Philadelphia Fed Manufacturing Survey (Jul).
12:30 PM GMT – Canada Employment Change (Jun)
23:30 PM GMT – Japan National Consumer Price Index (Jun). Foreign Investment in Japan Stocks & Bonds trading (Jul 12) at 11:50. All Industry Activity Index at 4:30 AM (+1)
03:00 AM GMT (+1) – NZ Credit Card Spending (May)


For more, visit our Economic Calendar