Market News & Analysis

Top Story

Global stocks rally as US Sino trade talks commence

Stocks across Europe charged higher on Monday, shaking off last weeks’ risk off tone. As US – Sino trade talks begin in Beijing we are once again seeing the markets adopt an all too familiar optimistic stance regarding the US – Sino trade developments. The world’s two largest economies have around three weeks to cover some serious ground before US trade tariffs increase from 10% to 25%. 

The reality is that we are unlikely to see any big moves towards a deal this week. With little solid evidence of progress, markets are pinning their hopes on the trade truce deadline of March 1st being extended. At these levels the market is not pricing in the hike in tariffs and the damaging consequences on the Chinese and global economy. 

Risk-on dampens demand for gold
As risk on dominated and the dollar extended gains for an eighth straight session, gold headed for its first drop in three sessions. The precious metal is down $9 dollars from the session high as it retests $1310. Gold traders will also be keeping a close eye on developments in Beijing. Headlines suggesting the two sides are moving closer to a deal could see gold fall back below $1300.

The FTSE snapped a three-day losing streak, supported by US-Sino trade optimism, a stronger start on Wall Street and a sharply weaker pound. 

Pound skids lower as UK economic growth cools
The pound dropped lower following the release of some sluggish GDP data. On learning that the UK economy grew just 0.3% quarter on quarter at the end of last year, the pound dived, breaking through resistance at $1.29. On an annual basis growth was at just 1.4%, its slowest pace of expansion since 2012. 

Economic growth slowed as businesses cut investment for a fourth straight month, the longest running decline since the financial crisis. The obvious issue here is Brexit. With just 46 days to go until the UK leaves the EU and no deal agreed, its completely logical that businesses are cutting investment. But it’s not just Brexit, we are also seeing here the effects of the global economic slowdown on the UK economy. 

Unfortunately, as pointed as by the BoE in its quarterly inflation report, the situation is expected to get worse before it gets better. The central bank forecast growth of just 1.3% in 2019 and that’s on the condition of an orderly Brexit.

Tomorrow Theresa May will make a speech to Parliament over Brexit ensuring pound volatility is here to stay for another session.


Disclaimer

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.

Important Notice:

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.