Global Markets:
- Asian stock markets: Nikkei down 2.41%, Shanghai Composite down 0.40%, Hang Seng down 1.34%, ASX down 0.74%
- Commodities: Gold at $1319.10 (+1.06%), Silver at $16.395 (+1.20%), WTI Oil at $61.03 (+0.07%), Brent Oil at $64.00 (+0.27%)
- Rates: US 10-year yield at 2.812, UK 10-year yield at 1.464, German 10-year yield at 0.638
News & Data:
- (USD) ISM Manufacturing PMI 60.8 vs 58.7 expected
- (USD) Unemployment Claims 210K vs 226K expected
- (USD) Personal Spending m/m 0.20% vs 0.20% expected
- (USD) Core PCE Price Index m/m 0.30% vs 0.30% expected
- (CAD) Current Account -16.3B vs -17.8B expected
- (GBP) Net Lending to Individuals m/m 4.7B vs 5.4B expected
- (GBP) Manufacturing PMI 55.2 vs 55.1 expected
- BoJ Gov Kuroda: BoJ Was Partly Responsible For Prolonged Deflation -Do Not Think BoJ Was The Cause For Deflation
- Australian new house sales dip in opening month of 2018
Markets Update:
Asian markets traded lower yesterday after President Trump signalled that he would impose protectionist tariffs on steel and aluminium imports in the US. While protectionist concerns have been looming in the markets for a while, this time around, the size of the tariffs, and the threat that this might escalate into a global trade war have spooked markets.
Asian governments had measured responses in that they shall wait for further clarity from the White House, however, EU and Canada have vowed to respond.
On a day of otherwise positive news for the US economy, the concerns of a trade war drove the narrative. The PMI rose to a 14 year high, and the number of Americans filing for unemployment benefits hit a 48 year low. Jerome Powell’s comments on Thursday were much more dovish than his testimony on Tuesday, however, they have been lost in the noise of the trade tariffs.
Nikkei has been on the declines, as Japan’s export dependent economy stands to lose heavily from a global trade war. Korea, which counts itself as one of the largest steel exporters to the US has also been reeling under the pressure. Miners continue to drag ASX down.
The dollar’s buying spree has lost steam, as US treasury yields inched downwards. The yen continues to gain, given its positioning as largely risk averse. The GBP and EUR will be in focus today, with British government set to rebut the EU Brexit draft. Additionally, key political events on Sunday in both Italy and Germany may make it a bad idea to carry exposure into the weekend.
Gold is expected to gain, given the uncertainty in the markets, and on fears if the trade rhetoric will continue. Oil has been in the red, as a trade war would negatively impact the US economy, and consequently, demand for oil.
Upcoming Events:
- 07:00 AM GMT – (EUR) German Retail Sales m/m
- 08:00 AM GMT – (EUR) Spanish Unemployment Change
- 09:30 AM GMT – (GBP) Construction PMI
- 10:00 AM GMT – (GBP) BOE Gov Carney Speaks
- 01:30 PM GMT – (CAD) GDP m/m
- 03:00 PM GMT – (USD) Revised UoM Consumer Sentiment
- Tentative – (GBP) Prime Minister May Speaks
- &more…
