Financial market research and analysis

Our analysts have their fingers on the pulse of the world's financial market news.

CFD trading is high risk and may not be suitable for everyone.
Equities mixed on soft data, US nonfarm payrolls in focus
US equities reversed gains from all-time highs amid Chinese officials voiced their concerns about the feasibility of a long-term comprehensive deal with the US and about the volatile nature of US President Donald Trump. With the APEC summit canceled on social unrest, investors start questioning whether Donald Trump and Xi Jinping will organize a bilateral meeting to discuss about the much-expected partial deal.

Trump, on the other hand, is about to have a hard time with the House of Representatives having decided to make his impeachment investigation public.

Anyway, the S&P500 closed 0.30% lower at 3023 on Thursday and the Dow Jones slid 0.52%. Nasdaq (-0.14%) remained less affected by the US stock sell-off, as technology stocks were lifted by encouraging Facebook and Apple earnings.

Asian stock markets traded mixed.

Nikkei (-0.57%) and Topix (-0.34%) edged lower on stronger yen.

Stocks in Hong Kong and Shanghai first fell then rose.

Kospi remained offered a touch below the 2100 level, as South Korean exports slumped almost 15% y-o-y in October due to global trade tensions and Japan’s ban on its exports.

Gold rallied past the $1510 an ounce, hinting at a rising distress at the current equity prices. In fact, the S&P500 has become completely detached from underlying companies’ profits on the back of exponentially rising equity prices. The last time a similar divergence happened, it was the 2000’s dotcom bubble. It is certain that lower interest rates help boosting company results and their share prices, but it is unsure how swollen the prices have become as a result of a perhaps unnecessary monetary push in the US.

Back to gold, a correction sell-off in equities could profit to the yellow metal, especially if the US treasury yields continue falling.

Halloween in Hong Kong

This week has seen shocking growth figures from Hong Kong. The city’s GDP fell 3.2% during the second quarter alone, as the progressively violent anti-China protests have taken a toll on its businesses. This has been the second heaviest quarterly contraction on record, and the social unrest seems far from being over. Due today, September retail sales data should confirm a hefty 28% fall in volumes, following last month’s -25%.

Taiwan, on the other hand, saw its GDP growth accelerating to an annualized 2.91% in the third quarter, from 2.40% printed previously and 2.45% penciled in by analysts. It is unsure whether Taiwan’s outstanding growth was partly due to Hong Kong protests, but it is a plausible explanation.

Elsewhere, the Eurozone’s growth slowed from 1.2% to 1.1% on annual basis in third quarter and the inflation estimate for September slowed from 0.9% y-o-y to 0.7% as expected. Soft economic data topped the euro gains near the 1.1180 against the US dollar. But the renewed weakness in the US dollar continues giving support to the pair. A progress to the 1.12 mark, the 200-day moving average, is possible if the US jobs figures match the weak market expectations.

Aren’t October NFP expectations too low?

A consensus of analyst expectations points at a significantly weak nonfarm payrolls report at today’s release. The US economy may have added 85’000 nonfarm jobs in October, versus 136’000 printed a month earlier and a twelve-month rolling average of 179’000. The GM strike may be accountable for at least 50’000 of last month’s decline in nonfarm payrolls.

Looking back, October NFP figures were as strong as 277’000 and 260’000 one year and two years earlier respectively. Thus, despite the GM strike, a print below the 100’000 psychological threshold is too weak for the season.

A read between 100K and 150K should trigger limited enthusiasm. A print up to 200K is good, while an unlikely read above 200K would be a cherry on top of encouraging third quarter company earnings and stronger-than-expected growth.

Angst among energy stock investors

The pound flirts with solid 1.2960 offers against the US dollar, where the major catalyzer is undoubtedly the weak dollar. An advance above the $1.30 mark should see increased profit takings, as the pre-election shenanigans should encourage the short positions to take over the sterling market.

According to the latest CFTC data, investors already trimmed half of the short positions that have been built between April and August, noting that in April, short and long positions were almost perfectly balanced. Hence, there is room for a further recovery, but the pace of recovery will likely slowdown heading towards the December 12 election. US President Donald Trump advised Johnson to team up with Brexit Party’s iconic Nigel Farage and leave the EU with no deal in hand, with the promise that the UK could ‘do much bigger numbers’ with the US. Investors gave little attention to his words.

Data-wise, the October manufacturing PMI may hint at slightly faster contraction in October. Soft data could trigger a tactical sell-off across the pound markets, but a kneejerk reaction, if any, should remain limited as manufacturing is not Britain’s core business. Next week’s services PMI should tell more about the economy’s health.

On the equities front, the FTSE fell big on Thursday, as energy stocks (-3.59%) led losses on Shell’s sharp decline (-4.50%) posterior to third-quarter earnings announcement. Despite improved earnings, Shell’s warning that it could not achieve a $25 billion buyback program by the end of this year left investors furious.

FTSE futures were better bid in Asia.

The FTSE is expected to open 32 points stronger at 7280p on Friday.


RBNZ throws a curveball. Equities down on waning appetite. Pound is quiet before inflation data
The Kiwi rallied after the Reserve Bank of New Zealand (RBNZ) left the official cash rate unchanged at 1.00%, while investors were expecting a 25-basis-point cut to 0.75%. The NZ 10-year yield jumped 16 points. Even the worsening inflation outlook didn’t bring… Read more


Investors turn to cash on lack of further progress in US-China talk
Alibaba beats its own record by more than 26%If the Singles’ Day sales are a gauge of the Chinese consumer health, then the Chinese consumers are doing just fine. E-sales on Alibaba’s platform hit a new worldwide record with $38 billion worth of sales during t… Read more


Chinese deflation throws cold water on equities race. Pound below $1.28 ahead of Q3 GDP release.
China buys.Chinese consumers have their eyes stuck to their phones today for the country’s biggest e-shopping festival known as ‘Double Eleven’. They are buying. Sales on Alibaba’s e-commerce platform hit $13 billion in the first hour of sales after midnight, … Read more


US equities race to record highs, sovereign yields rise as gold tanks $30 dollar on refreshing US-China news
Stock buyers jumped on the back of a bull following news that the US and China agreed to unwind tariffs they apply to each other’s exports gradually starting from next month. Lower tariffs mean higher spending, higher earnings and eventually a higher growth fo… Read more


Waning risk appetite on postponed US-China talks. Euro breaks key support. Pound still ahead of BoE decision
News that a potential trade deal between the US-China may be postponed to December weigh on the market sentiment. Investors were hoping to get an interim deal out of their way in November, but it is likely not happening. If stock traders are moody, it is becau… Read more


US dollar rallies. Gold tanks on major slump in Indian demand
Tit for tat.US trade deficit shrank to $52.5 billion in line with expectations, after exports fell 0.9% and imports retreated 1.7% in September. Trade with China took a hit after Washington imposed more tariffs on Chinese goods from September 1st. But the Whit… Read more


Equities gain on trade optimism. Will UK services PMI surprise in October?
Global markets trade with joy on improved trade optimism, as encouraging news continue breaking in from the US front. According to the latest news, the US is now debating whether to remove a part of tariffs imposed on Chinese imports on September 1st. Such a c… Read more


Stocks rally on US jobs data, US-China deal optimism. Aramco goes public.
US equities reached fresh all-time highs following an inspiring jobs report on Friday. The US economy added 128’000 new nonfarm jobs in October, comfortably beating the 85’000 expected by analysts despite the GM strike. The average hourly earnings grew 0.2%, s… Read more