July 22, 2019

Daily Market Review – Monday, July 22, 2019

Daily Market Review – Monday, July 22, 2019

Asia

With 9 days left to the launch of the SSE STAR 50 index, its underlying bourse, China’s new Nasdaq-style electronic board, launched Monday morning, generating am equities surge amongst nearly all 25 firms already listed there. Many companies doubled their value as trading began, tripping circuit breakers, aimed at calming over-excited markets. Operated by the Shanghai Stock Exchange, the exchange will accommodate mainly tech firms, including processor and biotech firms. Otherwise, Asian indices are closing mainly in the red this morning led by the Hang Seng’s 0.85% drop, as anti-extradition bill protests continue in Hong Kong. Smaller expectations of US FED interest rate cut are also eating into index prices. On the Trade War front, China’s official Xinhua news agency reports that Chinese companies are seeking ways to purchase US agricultural products. However, the government is planning anti-dumping triffs on stainless steel products from the EU, Japan, S. Korea and Indonesia.

Europe

The Euro peaked momentarily Thursday as outgoing ECB President Mario Draghi told the German Spiegel that the bank would restart asset purchasing, this after the EU lowered its growth forecast by a 1/10 to 1.4% in 2020. Across the Channel, the British government is preparing sanctions against Iran following the seizure of a British oil tanker Sunday. The pound has eased off its recovery spurt from Thursday after Parliament voted to prevent a no-deal Brexit. UK Finance Minister Philip Hammond said yesterday that he would quit a Johnson-led government since he could not support a no-deal Brexit. Johnson, on his apparent way to Downing 10, wrote in his regular column in the Telegraph yesterday that he trusted a technological solution to be found to solve the Irish backstop problem and hopes that the EU would agree to a free trade deal to prevent a no-deal Brexit. The Sunday Times reported yesterday that senior diplomats from Ireland and the EU have been hinting that a deal could be had.

US

The US dollar dipped by nearly 50 cents on the index Friday hitting a 2-week low before rebounding after NY Fed Head John Williams said the day before that a larger-than-expected 50 point rate cut was required to deal with sub-par inflation. On Friday, Fed officials assured markets that Williams’ words were academic. Meanwhile, Boston Fed Head Eric Rosengren said that, based on the data, a rate cut was unnecessary. Adding to the upwind – Gulf oil tensions that are sending investors to safe-haven dollars.

Commodities

Reuters this morning reports negative sentiment amongst institutional investors on oil due to increasing tensions in the Middle East. The sell-off is apparently enough to sustain the downward pressure on oil, now ranging between $55 and 56.40 per barrel of WTI, despite a reported 5-rig reduction in the Baker-Hughes count (a 3rd week of shutdowns in a row), continued sanctions on Iran and Venezuela and OPEC’s supply-cut extension. On Friday Iran captured a British oil tanker and on Saturday Libya shut down its El Sharara oil field.

Corporate

Microsoft shares added 2.89% on Friday after cloud services beat Office and Windows income in quarterly report the day before. Morgan Stanley clobbered expectations Thursday with a quarter billion upward surprise on Q2 revenues. The main contributor to the success was the bank’s wealth management division, which brought in $4.41bn in revenues.

Economic Calendar

TIME/PLACERELEASE/DATA
10:00 AM GMT – GermanyBundesbank Monthly Report
10:00 AM GMT – UKCBI Industrial Trends Survey – Orders (Jul)
12:30 PM GMT – USChicago Fed National Activity Index (Jun)
12:30 PM GMT – CanadaWholesale Sales (May)
15:00 PM GMT – JapanBoJ’s Governor Haruhiko Kuroda speech
22:30 PM GMT – AustraliaRBA’s Christopher Kent speech S

For more, visit our Economic Calendar