Welcome to my daily Markets Musings.
You’ll see things are different from now on. That’s because the full note was approaching 2,000 words some days and I’m breaking it up into a number of reports on the Axi Blog each day now.
That way traders can subscribe to the Axi Blog easily and then cherry pick the yarns and markets of interest
Feedback always welcome
Market Summary (8.30am Thursday August 9)
Oil fell out of bed last night as worries over Chinese demand surfaced after the trade data yesterday and in the wake of Chinas hitting back in the tariff war targeting energy products including oil and coal. The result is some big falls overnight with WTI down 3.5% and Brent 3.2% lower.
That fall and the worries about trade seemed to dominate stock trading in the US where the S&P and Dow were a little lower falling 0.03% and 0.2% respectively to close at 2,857 and 25,583. The Nasdaq 100 was up 0.1% at 7,469. Worth noting is that the candles on the S&P these past couple of days are suggestive a rally running out of steam and one that may need a consolidation/pullback.
Stocks in Europe were lower with the DAX off 0.12% and the CAC down 0.35%. But in the UK the FTSE 100 was 0.75% higher as the Pounds continued fall seemed to buoy sentiment for stocks. Equity markets in China were lower yesterday with the Shanghai Composite down 1.25% while the CSI 300 fell 1.6%.
The wash up of these competing moves is that after the ASX rose 15 points yesterday SPI traders for the second day in a row have prices flat to where they were yesterday afternoon.
To forex and the drift in Sterling continues as traders worry that a hard Brexit is indeed on its way. At 1.2882 it’s getting closer to the bottom of the current downtrend channel and is at it’s lowest level in close to 12 months. The other big mover is the Kiwi this morning after the RBNZ held rates but signalled it expects rates to remain at 1.75% through 2019 and into 2020 – NZDUSD is off half a percent since 7am at 0.6708.
The Aussie initially went with the Kiwi but it’s recovered to 0.7432. I’ve just done a number of presentations over the past couple of days on the outlook for the economy, housing, and consumer and I’ve com to the conclusion the RBA won’t be raising rates in 2019 and 2020 either. The CAD is at 1.3019, and USDJPY is down at 110.95 after the “opinions” from the recent BoJ meeting reignited chat the BoJ wants to change rates.
Besides worries about China oil was lower after the EIA showed the draw in crude inventories was lower than expected while gasoline stocks built. Base metals were mostly higher in overnight trade though copper is largely unchanged though with HGc3 up 0.2% to $2.7635. Gold is at $1213. Bitcoin is still struggling now down at $6,287 as traders fret that the SEC deferment another ETF means no one is going to turn up to buy their coins off them. US 2’s are at 2.67%, the 10’s are at 2.96%.
On the day we get machinery orders in Japan as well as Chinese PPI and CPI data. The ECB releases its economic bulletin, Canada releases housing data and then tonight besides jobless claims we get PPI data in the US.
Have a good day.
Macro Stuff that affects everyone and everything – either today or eventually
International (briefly today)
Have a great day's trading.
Chief Market Strategist
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Soaring US yields trigger the wrecking ball effect as yields become a source of volatility for risk, rather than a source of support