Market News & Analysis


Top Story

Stocks & Oil Drop On Fresh US-China Flare Up, UK Retail Sales Tank

Stocks in Asia fell sharply overnight and European bourses are set to open on the back foot as escalating geopolitcal tensions take centre stage. 

China is planning a new, controversial security bill which will be inserted directly into Hong Kong’s mini constitution, bypassing the territory’s Legislative Council. This legal show of force threatens to open old wounds and reignite the pro-democracy demonstrations which mired the financial hub and weighed on the economy at the turn of the year. President Trump has been quick to respond warning China over such action and threatening sanctions.

US and China have been on a collision course for several day. Today’s report that Chins is considering limiting freedom in the financial hub of Hong Kong appears to the straw that broke the camel’s back.

China will remain very much in focus. Today marks the start of the week-long Chinese annual parliament, which sees China’s senior officials deliver their plans for a whole range of issues, including defence, diplomacy and relations with the US.

The annual Parliament comes at a time when relations between US ad China have worsened significantly following the outbreak of coronavirus. 

China drops GDP target
The parliament is expected to take a sombre tone, with China already dropping its GDP target for the first time and pledging additional spending as its economy takes a hammering from the covid-19 outbreak. The Chinese economy contracted -6.8% in Q1 its first contraction in decades after the coronavirus outbreak paralysed production and hit spending. 

Oil plunges 5%
Oil has dropped 5% in early trade, snapping an impressive 6 session winning streak, on the back of worsening US – China relations and China’s commission of a GDP target. Despite WTI heading back towards support at $30, it remains on target to gain 9% across the week.

GBP unfazed by grim retail sales
The Pound is showing impressive resilience in the face of dire retail sales data. Retail sales slumped by a record breaking -18.1% month on month in April, worse than the 16% decline forecast. On an annual basis, retail sales plunged -22.6% worse than the -22.2% expected.

The data made for grim reading. However, the pound was unfazed, holding onto its gains versus the Euro and maintaining its -0.1% decline versus the US Dollar, finding support at $1.22. The data comes following better than expected service sector and manufacturing PMI’s in the previous session.

Dire data has been firmly priced in. Pound traders are more interested in the easing of lockdown restrictions and any headaches that Brexit will bring ahead of the key deadline next month.

FTSE levels to watch:
The FTSE is trading -1.7% lower, dropping through the key 6000 level. It trades below its 20 & 50 sma on 4 hour chart.
Immediate support can be seen at 5907 (day’s low) prior to strong resistance at 5665.
Support can be seen at 5935 (20 sma) prior to 6020 (50 sma) and 6120 (high 19th May)




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.