Daily Market Review – 10/1/2019

Asia

Car sales in China fell nearly 20% in 2018 according to Zerohedge this morning. And yet Bank of England head told reporters yesterday that the Chinese Yuan could soon rival the US dollar as a global reserve currency. Data from Asia overnight was generally unspectacular, China’s consumer and producer price indexes disappointed expectations – 1.9% for the CPI and 0.9 for the PPI, which fell by 2/3 in December. That’s its 6th straight month of decay. Japan’s leading economic index fell 3 ticks to 99.3 in November, even as foreign reserves added about $30bn to 1.27 trillion. In Australia, December inflation measures climbed – 2.2% for consumers, 0.9 for producers, pushing the dollar up by a dramatic 30 pips. .

Europe

Unemployment in Europe is at a 10-year low – hitting 7.9% in November. Same stores sales in the UK regressed another .7 of a % year on year in December, even as central banker Mark Carney warned journalists that the pound could be in for further downside momentum if markets felt threatened by post brexit UK-Europe ties. The pound for now remains steady, shifting slightly downwards halfway through the Asian session. European markets were slightly up, led by the DAX at .8 of a %.

US

US indexes may have topped their 4-day upshift after optimism in US – China trade talks subsides and President Trump stormed out of government shutdown talks. December’s FOMC minutes show economic optimism clashing with tightening financial conditions ahead of their latest interest rate hike. This was also at the root of their hesitancy regarding further hikes later this year. Concern was also expressed regarding Chinese growth slow and its impact on global markets. Yesterday’s FED head speeches reflected concerns and were no doubt a contributor to yesterday’s 80 cent drop in the dollar index.

Meanwhile, Canada is keeping its interest rates at 1.75%, as housing starts dropped to 213K – better than expected. Bank head Stephen Poloz said there was no rush to hike, providing a short hike in the Canadian dollar. The currency soon gave back half of that, no doubt in response to a slight drop in oil prices.

Commodities

Oil was trending gently downwards overnight after a huge $2 surge during the US session – that thanks to an equally dramatic drop in the US dollar as US markets opened yesterday morning. Also pushing prices were US-Sino trade talk optimism and a 1.7 mn barrel stocks drawdown based on yesterday’s EIA report. Another result of the dollar drop was gold adding about $15 per troy ounce during the Asian session.

Events

Today at 9 we’ll be seeing retail sales from Italy followed by credit conditions in Britain. Jobless claims will be in from the US at 1:30 GMT along with housing data from Canada. Later, more speeches from US FED members. Then more construction figures from Australia and New Zealand. Finally, at 10 to midnight, its household spending and trade balance from Japan.

 

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