May 29, 2019

Daily Market Review – Wednesday, May 29, 2019

Daily Market Review – Wednesday, May 29, 2019

Asia

Asia capped a bad day for equities overnight, the Nikkei down a percent and a quarter, china and Hong Kong straddling the “0”, as next week’s manufacturing PMIs are slated to finally show the cost of the US-China trade war. The fall in global indexes is this time being attributed to a feared cutback in rare-earth supplies from China in retaliation for US tariffs. Other potential Chinese “trump” cards include blocking Chinese markets to US companies and selling off its holdings of US treasury bonds. The Yuan rose against the USD by almost 10 pips last night after the US Treasury Department refrained from labelling China a “currency manipulator”.

Europe

European sentiment measures yesterday were mainly in the green yesterday, especially in France, where consumer confidence increased 3 points to 99 in May. The numbers do not take parliamentary elections into account. The EU is considering disciplinary measures against Italy for breaching dept-to-budget ratios, although Dep PM Salvini expressed optimism who believes the “old rules” should be “rediscussed”, following his party’s excellent results at the European Parliament, where such topics are voted on. Meanwhile, Reuters reports that a CBI survey of business and services companies in the UK show the lowest volume of work since 2012, with extensive investment cuts projected. Mortgage approvals, on the other hand, are at a 26-month high.

US

Investors are eyeing tonight’s BoC interest rate decision, the Canadian Dollar last night bounced off support at 0.7410. Employment and spending up, on one hand, but oil income down, all bets are open. In the US, the Dallas Fed’s manufacturing business index is at minus 5.3 for May, with house prices down to 2.7%. Yesterday’s bond auction saw a reduction in yields across the board, triggering the drop in all three major indexes an hour into trading.

Commodities

Oil prices were down again overnight as trade war concerns threaten an economic downturn and weakened demand, this despite Russian Dep PM Siluanov’s statement to Reuters Wednesday that Russia would consider extending the production curb agreement with OPEC.

Shares

Johnson & Johnson shares are on a weeklong dive after Sunday’s $86 mn fine against Teva Pharmaceuticals and March’s $270 mn claim against Perdu Pharma. Oklahoma Attorney General Mike Hunter has filed a multibillion-dollar case against J&J for an alleged 70,000 opioid-related deaths in 2017 due to false advertising and oversupply.

Economic Calendar

Today’s Top Economic Events
TIME/PLACE RELEASE/DATA
06:45 AM GMT – France Producer Prices (Apr), Consumer Price Index (May – PRELIMINAR), Consumer Spending (Apr) & Gross Domestic Product (Q1)
07:55 AM GMT – Germany Unemployment Rate & change (May)
08:00 AM GMT – Italy Business and Consumer Confidence (May)
11:00 AM GMT – US MBA Mortgage Applications (May 24), Redbook Index (May 24) at 12:55, and Richmond Fed Manufacturing Index (May) at 14:00
14:00 PM GMT – Canada BoC Rate Statement & Decision
21:30 PM GMT – OIL API Weekly Crude Oil Stock (May 24)
22:45 PM GMT – NZ Building Permits (Apr)
23:50 PM GMT – Japan Foreign Bond & Stocks Investment (May 24)
01:30 AM GMT (+1) – Australia Building Permits (Apr) & Private Capital Expenditure (Q1)

For more, visit our Economic Calendar