Market Brief: Risk Off

,

A summary of news and snapshot of moves ahead of the US session.

  • FX: JPY and EUR find themselves supported with commodity dollars under pressure, as US investors slowly make their way to their trading stations.
  • Euro has risen despite poor Eurozone data poor (e.g. Sentix investor confidence printed -13.7 vs. -6.9 expected and -5.8 last, while revisions showed German services PMI expanded at a much slower pace than anticipated in July.)

  • Risk remains off the menu amid fresh escalation in US-China trade spat, after President Trump last week announced fresh tariffs. Chinese yuan has fallen sharply through 7 against the dollar to a record low today – will this annoy the Us President further?
  • Stocks are sliding after China retaliated against the latest salvo of Washington tariffs by letting yuan weaken below 7 to the dollar. Beijing also signalled it will cease some U.S. agricultural imports. There are virtually no U.S. imports left on which China has not already levied retaliatory tariffs, so reported plans to hold off from buying certain U.S. goods is an alternative avenue open to it and may be the shape of things to come. China’s agreement to purchase U.S. agricultural imports was one of the conditions demanded by the U.S. for agreeing to a pause in imposing further tariffs on the second-largest economy. So, it is possible China’s move will mark the beginning of a new cycle of escalation.
  • Bonds: Thanks to weak data and dovish central banks, investors presumably continue to front-run central banks by buying haven bonds. As bonds extend rally, yields are continuing to fall to hit record low levels. The entire yield curve in Germany and Switzerland have fallen below zero recently and this morning saw UK 10-year yield drop to a fresh record low.
  • Commodities: Gold has extended its rally on falling yields and as amid a sell-off in stocks and USD/JPY; crude oil on the backfoot amid demand concerns.
  • Stock on the move: HSBC’s relatively solid second quarter results are cushioning the stock from a much harder hammering on Monday. It has fallen no more than 2% so far. Despite the shock departure of its CEO after just 18 months in the job, better than forecast profits and the revenues that rose faster than costs in the quarter left the shares down around 2% at last check.



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.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX 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), StoneX Financial 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 StoneX Financial 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 StoneX Financial 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.

StoneX Financial 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.