Market News & Analysis
Equity Market Handover: Car shares lead Europe’s reversal
Ken Odeluga June 24, 2019 10:35 PM
Stock market snapshot as of [24/6/2019 3:06 PM]
- Wall Street, Asia-Pacific and European stock markets could be splitting along trade-war lines at the start of a week that will be crucial for deciding what happens next in Washington’s dispute with Beijing
- The absence of confrontational rhetoric over the last fortnight ahead of G-20 talks between U.S. President Trump and China’s President Xi may have enabled a higher ceiling for sentiment. Nerves remain though
- U.S. indices opened positively. Markets from Sydney to China itself saw a similar mood
- The acrimonious collapse of a putative U.S.-China consensus in May is being somewhat offset by expected policy accommodation. Yet with a palpable sense of realism about what the two Presidents can achieve in two days, downside could be limited, regardless of the outcome
- The U.S. dollar’s tumble through significant technical markers (e.g., the Dollar Index’s 200-day moving average) also cushions markets that benefit from cheaper dollar financing
- Europe is not at this party though. A conspicuous move in the opposite direction is partly down to possible U.S. tariffs on EU cars that Donald Trump has toyed with for more than a year
- A painful reminder of what’s at stake came with Daimler’s third profit warning in about six months. The impact is extending the underperformance of European car shares even further
- Car makers are pressured from many sides, including by overcapacity, costs for righting alleged emissions wrongs, electric R&D and more. Monday’s fall suggests tariff-risks on top of those woes aren’t fully priced yet
- Daimler has traded as much as 5% lower, whilst STOXX’s Automobiles index slumps over 1%. Utilities and staples rise as befits a need for safety
- After Brent and WTI crude oil contracts advanced between 8% and 12% in just over a week, even oil shares are adrift as the black stuff takes a rest, despite the lack of let-up in Iran-U.S. tensions
- Treasurys join gold in rallying with U.S. shares, whilst the yen is only offside as it consolidates another percentage point gain against the dollar so far in June. The everything rally looks increasingly unsustainable
- U.S. pharma giant Bristol-Myers Squibb, misses out for now. It slides 4% after filing for EU approval to take over biopharma Celgene for $74bn. European regulators have indicated oversight isn’t being fast-tracked. Celgene also falls 4%
Upcoming corporate highlights
BMO: before market open AMC: after market close
Upcoming economic highlights
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.
Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.