August 20, 2019

Daily Market Review – Tuesday, August 20, 2019

Daily Market Review – Tuesday, August 20, 2019

Asia

China this morning lowered lending rates, with more cuts expected. The Central Bank has already lowered the Renminbi exchange rate twice in response to Donald Trump’s tariffs. Glimmering at the end of the tunnel connecting South Korea and Japan as the latter approves high-tech materials to the former for the 2nd time since the two parties flung export curbs at one another. Australia’s central bank minutes show cautious optimism despite the trade-war turmoils of its Chinese trading partner, as housing – having reached a trough – is showing signs of improvement and US markets continue to grow stronger. Labour data remains strong, although, despite rising wages, inflation remains sub-par. Low interest rates would remain in place due to global instability.

Europe

Eurozone consumer inflation declined to 1% in July YoY, and this morning’s Producer Price Index from Germany shows a 1-tick decline YoY to 1.1% for the same month. On the Brexit front, UK PM Johnson yesterday proposed to EC Pres. Tusk alternative measures to the Irish Backstop, reiterating his commitment to keep North/South Irish borders open. Meanwhile, U.S. Senate Democratic leader Chuck Schumer said he would oppose a UK-US trade agreement that undermined the Good Friday agreement.

US

After US Pres. Trump yesterday called for another 100-basis point interest rate cut, Federal Reserve Bank of Boston President Eric Rosengren told Bloomberg that he would oppose continued interest rate cuts not justified by economic data. Huawei this morning criticized the US government for its decision to blacklist affiliates, dismissing the Commerce Department’s 90-day delay of its ban for being insufficient. Markets yesterday reacted positively to news of the delay, the Dow jumping 300 points. Yesterday, VP Mike Pence said any trade deal with China would be continent upon its respect for the continued special status of Hong Kong, where protests are entering their 11th week.

Corporate

Alibaba failed to comment on its planned Hong Kong IPO when releasing its poll-beating earnings report on Thursday. Quoting sources involve in the deal, Reuters this morning raised doubts regarding the future of the IPO amidst continuing protests and government crackdowns in China. Over the weekend, the CEO of Cathay pacific stepped down, following Chinese pressure upon the UK-owned company regarding the participation of staff members in protests. The move signals Chinese intentions regarding other UK citizen-owned companies, including HSBC and Jardine Matheson Holdings. And despite commanding 50-years’ worth of oil reserves, climate change and growing investments in alternative energies are threatening Saudi Arabia’s Aramco privatization. Insiders are currently trimming expectations from $ 2tn to 1.5.

Economic Calendar

Today’s Top Economic Events
TIME/PLACE RELEASE/DATA
09:00 AM GMT – EU Construction Output (Jun)
10:00 AM GMT – UK CBI Industrial Trends Survey – Orders (Aug)
12:30 PM GMT – Canada Manufacturing Shipments (Jun)
12:55 PM GMT – US Redbook Index (Aug 16)
21:30 PM GMT – OIL API Weekly Crude Oil Stock (Aug 16)
00:30 AM GMT (+1) – Australia Westpac Leading Index (Jul)
03:00 AM GMT (+1) – NZ Credit Card Spending (Jul) & Global Dairy Trade Price Index
For more, visit our Economic Calendar