Daily Market Review – 2.1.2019

Asia

The Caixin index this morning confirms what we already knew – the Chinese manufacturing sector is contracting. Asian equities are on the way down, reflecting already red US index futures. Following the news from China, the Australian dollar is at a 2-year low.

Europe

Europe wakes up to a new year today with manufacturing PMIs rolling in. So far, we have a slowdown in Ireland, ahead of Brexit talks that will decide the future of the border between north and south. Still healthily expanding at 54.5 in December, the Irish economy was Europe’s top performer last year for the 5th time in a row.

US

The dollar is at a 4-month low as the US government opens the year – closed. The 10-day shutdown sees no signs of opening, especially with democrats set to take over the house tomorrow. Right now, the only chance for a strengthening in US currencies and stocks are deep dug within trade talks with China, also set to resume this week.  

Commodities

Oil begins the year by reacting to last week’s inventory and production level reports. Last week’s EIA report shows a marked increase in US shale exports, taking a bite out of OPEC and non-OPEC members alike. In response, Saudi Arabia, for example, is slashing prices to maintain its Asian market share. In short, we’re still testing support at 44.70, but the weekly trend is slightly down. Gold on the other hand continued to rise throughout the Asian session, retracing towards the end, but certainly reflecting the anxiety we’re seeing in the VIX and the yen.

Events

As mentioned, it’s PMI day from Europe and North America today. Add the Redbook index at 5 to 2, and that’s what’s in for us this January 2nd.

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