June 19, 2019

Daily Market Review – Wednesday, June 19, 2019

Daily Market Review – Wednesday, June 19, 2019

Asia

Asian equities are dramatically up this morning – the Hang Seng leading at 2.44% – after a White announcement that trade talks between the US and China (which is confirming the meeting) would resume today in preparation for a meeting between Presidents Trump and Xi at the G20 Summit in Osaka. This comes as welcome news after the Thomson Reuters/INSEAD Asian Business Sentiment Index this previous quarter hit a 10-year low of 53 on continued trade tensions.

Also on the agenda at the summit – reforms at the World Trade Organization. Japanese trade is down for the 6th month in a row on reduced orders from China. The adjusted merchandise trade deficit increased in May to ¥609.1 bn. as exports shrank by nearly 8%.

Europe

Voices of dissent yesterday emerged from the European Central Bank after President Mario Draghi said he was considering additional monetary easing unless inflation picks up.

CPIs show a ½% retreat in consumer inflation, and the Zew organization yesterday delivered gloomy sentiment indicators – minus 20 for the EU and -21 for Germany.

Still, equities closed nicely in the green yesterday led by the French CAC’s 202% rise followed by the Dax, Stoxx and FTSE, in that order. This morning’s PPI from Germany shows a much-worse-than-expected drop to 1.9% in May, from April’s 2.5% reading.

US

Donald Trump continues to pressure the Federal Reserve by threatening to fire Fed head Jerome Powell ahead of the FOMC’s meeting later today. Trump believes the Fed is “undercutting” his trade war policies, especially after ECB head Mario Draghi said he was preparing to loosen monetary policy.

Foreign resistance to Trump’s antics are beginning to take bit in the US economy, where farmers – according to Reuters – appear to be in for a 3rd round of government aid due to a choked export market. In one example, China is presently diverting its Soybean purchases from the US to Mexico to the tune of $12 bn.

On economic matters, housing data yesterday showed a 0.9% contraction in construction starts and a less than stellar permits requests, while the Redbook index shows a continuing 2.4% contraction in same-store sales. All 3 indexes closed in the green, the Nasdaq up 1.39% and the Dow 1.35%.

Commodities

Oil continues to hold on for dear life at 1350 after peaking yesterday at 1358, while WTI crude shot up above resistance at $54 pre barrel on yesterday’s reported 800K drawdown at Cushing Oklahoma. Backwind continues to be provided in the form of continued tensions in the Gulf, as the US refrains from committing to military action, should more Saudi tankers be attacked by Iranian proxies. Overnight, additional rockets hit targets in Iraq, including the Exxon-Mobil headquarters.

Bitcoin has receded from Monday’s 9396 high after Congressional Financial Services Committee members, Maxine Waters and Patrick McHenry called on Facebook to reconsider their Libra rollout – a threat to data privacy and security, they say.

According to Reuters, Senate Banking Committee member Sherrod Brown stated that “Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy. We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight.”

Libra is an association based in Geneva that includes Mastercard, Paypal and Uber under the direction of Facebook, which has created Calibra – a digital wallet connected to Facebook’s Messenger and Whatsapp.

Shares

Tesla shares received a short-lived boost yesterday after Chinese equity firms led by Shanghai-based Sailing Capital refused to invest in local electrical vehicle startups, such as Nio, Byton and Leap, which are positioning themselves as consumer competitors for the US firm.

Chinese subsidies have been reduced and standards requirements raised. Raising projected prices. Higher up, the US is prepared to open negotiations that would enable Airbus to receive government funding in return for US tax incentives to Boeing. British Airways this week signed a letter of intent to purchase 200 Boeing 737Maxes at the Paris air show, pushing shares by $38 over the past 48 hours about a third of their post-crash losses.

Economic Calendar

Today’s Top Economic Events
TIME/PLACE RELEASE/DATA
08:00 AM GMT – Italy Trade Balance EU (Apr)
08:00 AM GMT – EU Current Account (Apr)
08:30 AM GMT – UK Retail Price Index, Producer Price Index – Input & Consumer Price Index (May). CBI Industrial Trends Survey at 10:00
09:00 AM GMT – EU Construction Output (Apr)
11:00 AM GMT – US MBA Mortgage Applications (Jun 10). At 18:00 – FOMC Economic Projections, Monetary Policy Statement & Interest Rate Decision.
12:30 PM GMT – Canada Consumer Price Index (May)
14:30 – PM GMT – OIL EIA Crude Oil Stocks Change (Jun 14)
22:45 PM GMT – NZ Gross Domestic Product (Q1)
23:50 PM GMT 0- Japan Foreign Investment in Japan Stocks & Bonds trading (Jun 14). At 02:00 AM GMT (+1) – BoJ Monetary Policy Statement & Interest Rate Decision. And at 04:30 AM GMT – All Industry Activity Index
01:15 AM GMT (+1) – Australia RBA’s Governor Lowe speech SPEECH
    For more, visit our Economic Calendar