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Stocks Bounce On Trump’s Tariff Delay

Asian markets joined the relief rally overnight, which saw stocks on Wall Street surge, after the Trump administration delayed tariffs on some Chinese imports until December. Good news in the markets has been a rarity over recent weeks, so reports of the delay provided some much need relief to markets that have been gripped by political and economic turmoil.

The tariff delay overshadowed a slew of disappointing data from China and continued political unrest in Hong Kong, highlighting just how keen the markets are for some form of resolution to the ongoing problem. The S&P closed up 1.5% whilst the Nasdaq was the standout gainer soaring 2%, not so surprising given that electrical items such as laptops and mobile phones dominated the list of items for which duties will be delayed.

The tariff delay has prompted a cautious rebound in risk appetite, with flows returning to riskier assets such as equities. Futures across Europe and US are pointing to a stronger start on the open. Safe havens, which have rallied hard across recent weeks moved sharply lower. The Japanese yen declined 1.2% versus the dollar, whilst gold also gave back 0.7% dipping back below $1500.

China’s vice premier Liu He, US Trade Representative Robert Lighthizer and Steven Mnuchin US Treasury Secretary, have agreed to speak again in two weeks, offering hope to traders that this could be the start of a more constructive phase in trade talk negotiations. That said, any optimism comes with a large dose of caution; the fact that Trump changed his mind so quickly regarding applying the tariff and then delaying them highlights his hot headed and haphazard approach to negotiations which could act as a significant barrier to any trade deal being achieved.

German GDP to send EUR to $1.11?

On the economic calendar German GDP data is expected to steal the show. Given the dismal data stemming from Germany over recent weeks a contraction in the German economy is looking highly likely. Expectations are for -0.3% decline following 0.6% gain in the previous quarter. After a decade of being a powerhouse for growth, the German economy is starting to lag behind as it remains caught up in the US – Sino trade dispute. A weak reading could see the EUR/USD break through $1.1160 and target $1.1100. A stronger than forecast reading could see the pair move back towards $1.1220 prior to $1.1250.

Pound more interested in Brexit than UK inflation data?

The pound continued to trade around $1.2050 mark giving back strong wage data inspired gains by the end of the session yesterday. Today UK inflation could grab some attention. However, the message from the pound has been clear. Brexit is the single most important driver of the pound. Brexit headlines are more likely to move sterling in any meaningful way. This is quite simply because BoE monetary policy greatly depends on the type of Brexit the UK achieves. Inflation is expected to tick lower.

19-8-2019

Stimulus Hopes Lift Sentiment & Stocks
Quickly recapping, equities experienced their worst week so far this year, and bonds soared as investors sought safety amid an escalation of the US – Sino trade war. The US and UK yield curves inverted flashing recession alarm warning bells. As the Dow dumped … Read more

16-8-2019

Tensions ease as central bank stimulus expectations grow
Wall Street finished a volatile session broadly on positive ground overnight, with the S&P and the Dow advancing whilst the Nasdaq nudged lower. Stronger than forecast US retail sales and better than expected earnings from the likes of Walmart helped calm … Read more

15-8-2019

Carnage on Wall Street as yield curves invert
As recession warnings flashed from the bond market, Wall Street plummeted lower overnight. The Dow closed down 800 points whilst the Nasdaq and the S&P tumbled 3% and 2.9% respectively. Asian markets followed US equity indices lower. An inversion of the 2… Read more

14-8-2019

Stocks Bounce On Trump’s Tariff Delay
Asian markets joined the relief rally overnight, which saw stocks on Wall Street surge, after the Trump administration delayed tariffs on some Chinese imports until December. Good news in the markets has been a rarity over recent weeks, so reports of the delay… Read more

13-8-2019

Dow Below 26K Amid Growing Recession Fears
Wall Street closed sharply lower and Asia markets followed in its footsteps overnight. Political unrest in Hong Kong as protestors brought the airport to a standstill, political uncertainty in Argentina as current President Macri unexpectedly lost in the prima… Read more

12-8-2019

Equities Cautiously Higher Despite Ongoing Trade Pessimism
With part of Asia closed for public holiday, those Asian markets remaining open nudged higher overnight. Meanwhile, European and US futures are pointing to a stronger start on Monday, despite uncertainty surrounding the next steps in the US – Sino trade disput… Read more

9-8-2019

Italy early vote risks weigh on euro
Escalating trade war is all the US got from imposing a 10% tariff on additional $300 billion worth of Chinese imports, from calling China a currency manipulator and most recently from holding off on giving licenses to companies wishing to do business with Chin… Read more

8-8-2019

Odds up for larger Fed, ECB rate cuts
It has been a wild week for the global markets, as the dovish central bank expectations went through the ceiling following the escalating trade tensions between the US and China. The Reserve Bank of New Zealand opted for a surprise 50-basis-point cut (vs 25bp … Read more