May 20, 2019

Daily Market Review – Monday, May 20, 2019

Asia

Chinese markets continue down this morning after China last week confirmed it was holding off talks pending a US change in approach to trade talks. Surprisingly, the safe-haven yen continues to lose value and the Nikkei this morning added a quarter percent. Japan’s Q1 preliminary GDP assessment has been upgraded to 2.1% annualized growth instead of an expected 0.2% contraction, while the drop in industrial production has lessened somewhat, coming in at -4.3% YoY for March – up 3 tenths from the month before. Finally, with the RBA’s meeting minutes due in tonight, expectations are for indications showing an intended interest rate cut at the Australian central bank’s next meeting. Australian equities shot up over the weekend, erasing the month’s losses and getting ever-so-closer to their October 2007 peak – just before the fall, after the ruling conservative party somewhat surprisingly won national elections at the end of the week.

Europe

The pound continues to spiral downwards as the countdown begins towards Theresa May’s announcement of an upcoming resignation date – especially considering that the strongest option for her replacement would be hardliner Boris Johnson. The Euro is not faring much better, as Italian Dep. PM Salvini continues to attack EU’s fiscal rules ahead of European Parliament elections in the 2nd half of this week. Meanwhile, this morning, German producer inflation improved MoM in April to 0.5% from a contraction of 0.1% in March. And, Friday’s CPIs for the Eurozone show a slight improvement in the core figure for April – 1.3% YoY, this after Thursday’s trade balance in March jumped from €18bn (not seasonally adjusted) to €22.5bn in March.

US

With the US ambassador to China scheduled to visit Tibet this week, US equities closed sharply down last week on trade war fears and FED speakers displaying little concern for rising inflation. Last week, the Commerce Department presented excellent data for housing starts and building permits, while the Department for Labour also surprised to the upside with initial and continuing jobless claims. The Philly-FED manufacturing survey doubled from 8,5 in April to 16.6 in May.

Commodities

Oil prices jumped Thursday to complete a double bottom, and continued to climb, hitting $63.80 this morning, this after Baker Hughes indicated a 3-rig reduction in active oil wells in the US to a 14-month low of 802 and Saudi Energy Minister Al-Falih told reporters there was consensus amongst OPEC+ members to gently erase inventories. And Bitcoin regained its 8K foothold over the weekend, other cryptos following the lead.

Economic Calendar

Today’s Top Economic Events
TIME/PLACE RELEASE/DATA
09:00 AM GMT
– EU
Current Account (Mar)
12:30 PM GMT
US
Chicago Fed National Activity Index (Apr), followed by 3&6-month Bill Auction at 15:30, and FED head Jerome Powell Speech at 23:00
01:30 AM GMT (+1) – Australia RBA Meeting Minutes, followed by RBA Gov Philip Lowe speech at 02:15
03:00 AM GMT (+1) – NZ Credit Card Spending (YoY) (Apr)

For more, visit our Economic Calendar