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.
Trade Fears offset Rate Cut Optimism

Asian markets traded mixed overnight as optimism over  more supportive central banks was offset by ongoing concerns over trade. Trump poured cold water on any hope that the US and Mexico were close to a deal, hitting already fragile sentiment. If no deal is reached tariffs at 5% will begin on Monday and judging by Trump’s comments that is looking more likely than not.

Mexican markets were dealt an additional blow after rating agency Fitch downgraded the country’s debt rating to BBB, whist Moody’s cut its to negative from stable. The Mexican peso dropped 0.9% versus the dollar as investors responded to the downgrades.

Wall Street managed another positive close as investors focus on the possibility of the Fed cutting interest rates to support the US economy in the event of a downturn, amid a drawn-out trade war. Whilst weak ADP private payroll numbers supported the case for a rate hike and was cheered by investors, stronger than forecast ISM non-manufacturing data had the reverse affect. Friday’s non-farm payrolls will provide markets with a clearer picture as to the health of the US economy and the chances of rate cut in the near term.

Oil holds on to losses

Having plummeted 3.5% in the previous session, oil was holding onto those losses in early trade on Thursday as it hovered around a five-month low of $51.80. The sharp fall came following an unexpected jump is US inventories amid escalating concerns over future demand. Supply is swelling just as fears of a global downturn are hitting the future demand side of the equation. This timing couldn’t be worse. Brent dipped below $60 per barrel, whilst WTI has managed to hold above $50. Any further signs of the global economy weakening, and these key levels could quickly be breached.

All eyes on the ECB

After the RBA cut rates and the Fed signalled a dovish shift, all eyes are on the ECB and what their next move is likely to entail. The euro pushed higher versus the dollar in the early part of the week, following a more dovish Jerome Powell. However, the euro has pared some of those gains as we move towards the ECB announcement.

Despite some improvements to eurozone data, the most important data points for the ECB, namely, consumer spending, manufacturing, retail sales, and inflation have been moving lower. External factors such as the US – Sino trade dispute and Brexit are also acting as a drag on the eurozone economy. Draghi & Co could struggle to stay positive. Given the low inflation and trade uncertainty we expect the ECB to trim their macro-economic projections and  modify their interest rate forward guidance. As for the TLTRO3, the devil is in the detail, investors will use this to make judgement as to how dovish the ECB are right now.

13-9-2019

Global equities rally, Eurozone yields converge after ECB delivers disputed stimulus
Asian equities gained after the European and US markets closed in the green, as the European Central Bank (ECB) delivered more stimulus to boost inflation and Trump administration hinted at an interim trade deal with China to ease tensions before the next face… Read more

12-9-2019

Euro tests $1.10 but ECB doves could be hard to satisfy
The European Central Bank (ECB) meeting is what matters the most to worldwide traders today. The ECB is expected to take monetary action at today’s meeting to give a boost to the depressed Euro zone economy as a result of the rising global trade tensions, slow… Read more

11-9-2019

Downside correction in sovereign bonds continues ahead of ECB, Fed meetings
Asian equities mostly gained on Wednesday, but stocks in mainland China remained on the back foot despite the Chinese government’s dismissal of quotas and approvals for foreign investors. The latter move was interpreted as a sign of desperation and an increase… Read more

10-9-2019

Sovereign bond sell-off hit sentiment, gold dives below $1500
A global sovereign bond sell-off sent the US 10-year yield to two-week highs.The 10-year German bund yield eased to -0.585% from above -0.70% at the beginning of this month. The euro held ground above 1.10 against the greenback, but the topside remained limite… Read more

9-9-2019

Equities gain on Chinese stimulus, GBP worried ahead of production data
Asian equities kicked off the week on a positive note as lower-than-expected jobs report in the US consolidated the dovish Federal Reserve (Fed) expectations and the People’s Bank of China (PBoC) announced more monetary stimulus amid country’s exports fell 1% … Read more

6-9-2019

Hexo is still a good play for cannabis investors
Hexo Corp is a leading player in cannabis industry with more than $1 billion market cap after the acquisition of Newstrike Investors like Hexo for its renowned international partnerships Revenues grow steadily, but investors are concerned with company burn… Read more

6-9-2019

NFP in focus, US jobs at risk due to trade war
The US dollar gained against most G10 currencies, except the kiwi, amid the strong data tapered the dovish Federal Reserve (Fed) expectations. The ADP employment data revealed on Thursday that the US economy added 195’000 private jobs in August, versus 148’000… Read more

5-9-2019

World equities rally, GBP extends gains
Equities rally worldwide as US and China said to meet early October in Washington, Hong Kong announced the withdrawal of the extradition bill and British MPs rejected a snap election by next month.The US markets closed Wednesday’s session in the green. S&P… Read more