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RBNZ cuts 50bp, sovereign yields tank
The Reserve Bank of New Zealand (RBNZ) lowered its official cash rate target by 50 basis points to an all-time low of 1.00% unexpectedly. Kiwi fell more than 1.70% against the US dollar to the lowest level since January 2016 and the NZ 10-year yield slid 17 points. The surprise rate action from the RBNZ can only spur the expectations of a similar size cut from the Federal Reserve (Fed). The US 10-year yield slipped below 1.66% in Asia, as the probability of a 50-basis-point cut in FOMC’s September meeting stood at 33%, slightly lower than on Tuesday, after the People’s Bank of China stabilized the yuan near the 7 mark to cool off the sell-off across the global equity markets. The PBoC pledged that the yuan won’t fall continuously in an effort to prevent the US-China trade war from turning into a currency war. White House’s Larry Kudlow said that they still expect to welcome Chinese officials for September talks.

The PBoC’s goodwill gesture has been a quick fix for the US equity markets. Major US indices gained past 1% on Tuesday. The volatility index, VIX, fell 18% after reaching the highest levels since January on the back of this year’s biggest stock rout. The S&P500 (+1.30%), the Dow Jones (+1.21%) and Nasdaq (+1.39%) closed Tuesday’s session in the green, although the Asian traders rebuffed New York gains. US equity futures fell in Asia.

St Louis Fed’s Bullard, a dovish FOMC member, remained impassive regarding the escalation in US-China trade tensions. He said that the Fed has already cut rates to give support to the economy and that the ‘US monetary policy cannot reasonably react to the day-to-day give-and-take of trade negotiations.’ At this point, the FOMC members will likely avoid fueling the dovish Fed expectations, which have already gone well ahead of the Fed’s thinking. The Fed has given a hand, but the market is now looking to take the whole arm.

The Nikkei (-0.48%) and Topix (-0.21%) eased in Tokyo, as the Japanese yen remained the best performer (+0.48%) against the US dollar. Shanghai’s Composite remained unchanged (-0.01%), while Australia’s ASX (+0.68%) gained after the RBNZ surprised by a 50-basis-point cut. Energy stocks (-0.63%) remained offered in Sydney however, amid WTI crude consolidated losses near $53 a barrel. Brent crude extended losses to $58 a barrel.

FTSE futures (-0.03%) hint at a sideways open in London, after having shred 7.25% over the past week. Dip buyers are tempted to enter fresh long positions near the 200-day moving average (7184p) before a further pound recovery, but the dust needs to settle first. Energy and mining stocks should continue weighing on the FTSE, as rising concerns of a weaker global demand keep the downside pressure tight on the commodity markets.

Cable tested the 1.22-resistance on the back of a softening US dollar, as the speculations of an additional 50-basis-point rate cut from the Fed in September pulled the US yields and the dollar lower. The slowing negative momentum in sterling hints that a second bullish attempt could clear the 1.22 offers. The next key resistance stands at a distant 1.2387, the minor 23.6% Fibonacci retracement on March – August drop. Decent 1.22 call options will expire tomorrow and could give a further boost if the pound manages to catch the 1.22 train.

Gold rallied to $1490 an ounce in Asia. Risk averse investors seem determined to test the $1500 level for the first time since April 2013. The falling sovereign bond yields and increased market volatility could justify an attempt to the $1500 mark. Though the gold market is on the verge of an overbought market, with the 14-day relative strength index pointing at the 70% level, investors will likely continue buying the dips.

10-12-2019

Shares back up as trade deadline approaches
Global event risk for the remainder of the week is a disincentive to take big risks right now. There are four trading days left for some announcement on the new US tariffs to be imposed on China. It looks like if the US President had to make the decision on ne… Read more

9-12-2019

A holding pattern before big week
MARKET WRAP: A holding pattern before big week Indices Friday’s blowout US jobs report kept Asian stock market sentiment upbeat at the start of the new week.  In Europe, indices are down as investors strap in for what promises to be a busy week. There are tw… Read more

6-12-2019

China waives tariffs, NFP preview & Uber safety
European shares have opened stronger on Friday before the release of US monthly employment figures. That follows a generally upbeat session in Asia. Similarly LCG pricing points to a higher start on Wall Street. The British pound is hovering at 2-year highs ag… Read more

5-12-2019

OPEC meeting begins
European shares started trading on Thursday with a softer tone while LCG pricing points to a positive open on Wall Street, that follows a positive session in Asia. The British pound is extending gains beyond 1.31 in a backdrop of broader dollar strength. Gold … Read more

4-12-2019

No phase one? PMI green shoots wilt, NATO, GBP 7-month high & Alphabet
Shares in Europe opened higher on Wednesday, that follows a rocky session in Asia, while Wall Street is pointing to a firmer start. Safe haven currencies including the Japanese yen and Swiss franc have been making gains. Gold has joined in on the safe haven fl… Read more

3-12-2019

Steel Tariffs & Wall Street drops, Christine Lagarde & EURUSD holding 1.10
Shares in Europe are on course for a positive start with LCG pricing indicating a higher open on Wall Street. The dollar is up slightly after falling yesterday. Gold remains in a tight range while oil is rising for a second day.Wall Street drops after steel ta… Read more

2-12-2019

Chinese manufacturing rebound, Trade deal stalled & Ted Baker
European shares opened higher on Monday with LCG prices pointing to a higher open on Wall Street. The dollar and the British pound are slightly firmer. Gold is softer and oil is off the lows of Friday’s big sell-off. Surprise pickup in Chinese & European … Read more

29-11-2019

Muted volumes, Black Friday, Amazon & Ocado
European markets have opened slightly lower on Friday while futures point to little change on Wall Street for a half-day trading session after Thanksgiving. Currency and commodity markets are flat. Muted trading volumes around Thanksgiving and some fatigue fr… Read more