Market News & Analysis


Market Brief: Markets Brace For Day 2 U.S-China Trade Talk

,

FX Brief:·         

  • It was a narrow-ranged day for currency markets, although AUD and GBP are the strongest majors, CHF is the weakest. The US dollar index (DXY) remains stuck near yesterday’s low and shows potential to break lower if a partial trade deal can be struck between US and China today (or bounce if no deal is made).
  • AUD/USD touched a 2-week high, EUR/USD is resting in a small range above 1.10, and USD/JPY touched a 6-session high.  
  • The former ambassador to Ukraine is expected to testify later today to the House of Representatives investigators.



Equity Brief:

  • Key Asian stock market have gapped up in today’s Asian session and almost reached their respective 5-day highs on the backdrop of a promising U.S-China trade negotiation talk that has concluded its first day and the second day of talk will proceed as scheduled today.
  • Market participants have now been “guided” towards a potential “partial trade deal that includes a currency pact with China” to be concluded today by a series of U.S President Trump’s tweets that includes a meeting with the highest ranking official from the Chinese delegate, Vice-Premier Liu He at the White House. Thus, the “bar” has been set high on the positive side and any disappointment towards the end of today’s talk or negative outburst from President Trump’s tweets can easily reverse the current gains.
  • Hong Kong’s Hang Seng Index is the best performer so far as it rallied by 2.19% after being labelled as the worst performer since Jul 2019. Even though its stellar performance seen today, the Hang Seng Index is still down by -9.4% from its Jul 2019 high of 29007.
  • The S&P E-Mini futures has continued inch higher by 0.42% in today’s Asian session to print a current intraday high of 2956, just below the 2960 level that has stalled the previous up move seen last week.

Up Next

  • Day 2 of U.S-China trade talk where its conclusion will set the tone for the market in the next few weeks. Things to look out; if there is a currency pact signed, what are the exact terms and how such pact is to be enforced. A partial deal with what kind of strings attached; how long U.S. will delay the next tranche of tariffs on Chinese imports and will China be willing to give up its industrial policy that subsides the SOEs (state owned enterprises), one of the major requirements that U.S demands from China in order to break the impasse for a full trade deal.  
  • Germany CPI for Sep where market is expecting similar growth rate from last month; 0.9% y/y and -0.1% m/m. If inflation numbers disappoint, the EUR/USD may see some downside pressure to retrace yesterday’s gains.  


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.