Market News & Analysis


Market Brief: Conflicting Trade Headlines, But Markets Want The Real Deal

,


View our guide on how to interpret the FX Dashboard

FX Brief:

  • Officials from US and China have confirmed that both sides could roll back tariffs as part of the phase one trade deal, although no timetable has been presented.
  • Chinese exports rose 2.1% YoY (Yuan-denominated), pushing their trade surplus up to 42.8 billion versus 40.4. Imports also fell -6.4%, less than the expected 8.9% forecast.
  • Australian home loans rose for a second month thanks to record low rates and rising house prices. Yet until we see the rest of the economy follow suit (wages, inflation, consumption and a lower debt to savings ratio) it’s unlikely to call for higher rates, unless RBA targets rising house prices for once…
  • Household spending rose 9.5% YoY in Japan, its fastest pace since 2001. Still it was fully expected according with the pending sales tax hikes just around the corner. The last time Japan hiked sales taxes, a similar pattern emerged only to see consumption crash the following months.
  • AUD is the weakest major, minor ranges elsewhere across the FX space. AUD/JPY saw the most volatility, with its daily range spanning 87% of it ATR. Moreover, it’s found this volatility around the 200-day eMA, although today’s bearish price action has remained within yesterday’s range.



Equity Brief:

  • Key Asian stock markets have not taken the positive cue from the U.S. stock market where all three benchmark indices; S&P 500, Nasdaq 100 and Dow Jones Industrials hit another fresh all-time highs on the backdrop of U.S-China trade deal optimism after the Chinese Commence Ministry commented that both sides had agreed to roll back some of the imposed tariffs.
  • The latest trade deal related news flow from the U.S. has been lukewarm where media has reported from unnamed sources that an agreement between U.S. and China to roll back existing tariffs as part of the “Phase One trade deal” has faced fierce internal opposition in the White House and even from outside advisors. So far, the U.S. Trade Representative’s office has not commented on whether or not there will be tariff rollbacks. 
  • The markets are appearing to get “lethargic” on such “hot and cold” trade deal related headlines without any concrete direction where it will lead until a real deal is being signed off.
  • Almost all Asian stock markets are in the red after hitting 5-6 months highs. The worst performer is Singapore’s Straits Times Index (STI) that has dropped by -0.79% so far led by Golden Agri-Resources, Ascendas Real Estate Investment Trust and Genting Singapore that have tumbled by -6.52%, -5.45% and -3.13% respectively.
  • Casino operator, Genting Singapore has reported a weak Q3 earnings where net profit has dropped to S$158.9 million from S$210.4 million y/y and revenue fell about 7% which has triggered a negative reaction on its share price; it drop as much as 3.7% to hit a current intraday low of S$0.925, the biggest intraday percent drop in 4-months.
  • The 10-year Japanese Bond Government (JGB) yield has continued to inch higher in line with the rest of the developed nations’ sovereign bond yield, on track for its biggest weekly climb since May 2013. An increase in JGB yield can trigger a liquidity tightening condition that explains the earlier intraday gain of 1% seen in the Nikkei 225 has been reversed to the downside.

 

Up Next:

  • BoC surprised markets with a dovish meeting last month by lowering their projections. This means CAD traders may be more sensitive to a weak employment print later today, had they been otherwise. 



Matt Simpson and Kelvin Wong both contributed to this article

Data from Refinitiv. Index names may not reflect tradable instruments and not all markets are available in all regions.


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.