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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 because a lot could go wrong during that additional month.


American brands lose popularity in China

According to a latest survey in China, more than 75% of the surveyed expressed their discontent regarding the endless trade war with the US and they said they would boycott American products. Hence, the US has an accrued interest in cooling off the tensions before further damaging its country’s image in the world’s largest consumer market.

The Single’s Day shopping festival due November 11 will give an insight on how serious the situation has become from the perspective of an average Chinese consumer. It is said that the American brands could be left behind at next week’s shopping euphoria. The Chinese reluctance to buy American products could also have an undesired impact on massive purchases of farm products that have been promised to the US.

Henceforth, it is in America’s best interest to get a deal done. And fast.


US’ loss, Australia’s gain?

One’s loss is another’s gain. Australia saw its trade surplus boosted to A$ 7.2 billion in September versus A$5 billion expected by analysts. Last month’s A$5.9 billion read has been revised up to A$6.6 billion.

The US-China trade war is certainly a leading booster for Australian exports. Australian exports surged by more than 35% since last year, although the latest figure showed a slight 2.7% decline in September.

Still, the Aussie remained offered against the US dollar in Sydney, on fears that the extended uncertainty on the US-China trade front could weigh on key commodity prices in the coming weeks.

Iron ore slid 0.40% in Dalian exchange, as LME copper fell 0.56%.


Asia mixed

Australian equities gained 0.60%, but energy stocks (-1.17%) underperformed as oil softened on mounting uncertainties regarding a trade agreement between the US and China.

Hang Seng (-0.46%) and Shanghai’s Composite (-0.26%) fell. Chinese yuan weakened past the 7 mark against the US dollar.

Japanese equities treaded water, as yen strengthened on increased safe-haven demand. The latest Japanese 10-year bond auction, on the other hand, saw limited demand sending the 10-year JGB yield to a five-month high.

Gold returned to $1490 an ounce. Resistance is seen near the $1500 level due to rising sovereign yields across G10.

The US 10-year yield stabilized above the 1.80% mark, as the US dollar consolidated a touch below the 98 mark, the monthly resistance.


Euro breaks key support

The EURUSD stepped into the bearish consolidation zone after breaking the 1.1060 Fibonacci support in Asia. Stronger trend and momentum indicators could encourage a deeper sell-off targeting 1.1030 (50% retrace on October rebound) and 1.0992 (major 61.8% retrace).


BoE to keep a low profile

The pound sees limited price action. Cable drifts lower following a lower-highs-lower-lows pattern on election uncertainties and a stronger US dollar.

The Bank of England (BoE) is expected to stay quiet at this week’s monetary policy meeting.

Inflation in the UK has been cooling down with the recent pound appreciation and the BoE needs that margin to be able to intervene effectively if needed after the Brexit happens.

The stronger the pound, the lower the inflation. The lower the inflation, the higher the BoE’s action scope. Hence, British policymakers have no interest in sending dovish messages out to the market and spoiling the pound’s strength.

The actual wind down in sterling, on the other hand, should remain limited by the low probability of a no-deal Brexit.

The FTSE 100 tests the 7400p offers on softer sterling. Energy and mining stocks could diverge negatively on postponed US-China trade talks and the resulting decline in risk appetite.

The FTSE is expected to open 9 points softer at 7387p.


Sainsbury’s Q3 EPS seen below 0.10p

Sainsbury will reveal its third-quarter earnings today. The earnings per share is seen as low as 0.081p versus 0.106p printed a quarter earlier. Increasing profits in a long-matured retailer market is a hard task, but doing it amid Brexit shenanigans is a whole different story.

Still, there is sizeable opportunity in boosting sales via convenience stores and the digital platform. Also, Sainsbury’s refurbishment efforts seem to pay in early results. But is that enough for investors?

Sainsbury’s share price is testing the 200p support. Given the low expectations, a positive surprise could give a boost to the stock price and encourage a move toward the 218p, the 200-day moving average. While a disappointment could send the stock price toward the 180p, August dip.

13-11-2019

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

12-11-2019

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

11-11-2019

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

8-11-2019

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

7-11-2019

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

6-11-2019

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

5-11-2019

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

4-11-2019

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