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
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Market Summary (7.43 am Wednesday August 1)
Stocks are higher this morning on a report from Bloomberg that the US and China have sought to restart trade talks in order to defuse the trade war. Apparently, representatives of US Treasury Secretary Steve Mnuchin and China’s vice-Premier Liu He are holding private conversations.
That’s helped sentiment, but just in the last half hour or so the Wall Street Journal reported that the talks have made little progress.
But, at the close of play US stocks are higher with the S&P 500 up 0.5% to 2,816 as it ratchets backwards and forwards in the recent range. Clearly, that tech stopped collapsing was important, but the fact that industrials, healthcare, utilities, and basic materials sectors lead the market higher is a testament that it was more than that. Indeed, the leap in industrials of 1.69% and basic materials rally of 0.93% is a good pointer to strength in Australia, on the ASX, today. SPI traders have added 21 points as result. That’s going to put the physical market right near recent range highs.
Anyway, back overseas and the Dow was 0.4% higher to 25,415, while the Nasdaq 100 lifted 0.5% to 7,231. Apple's earnings (a beat and after hours rally) after the bell will be important for the tech sector in the day and days ahead. Across the Atlantic the DAX was up marginally, the CAC rose 0.4%, and the FTSE 100 was 0.6% higher at 7,748.
To forex markets now and the USD is a little stronger in index terms, mostly on the back of the post-BoJ surge in USDJPY (and a little risk appetite perhaps) – it’s at 111.80, up 0.65%. The Euro is largely flat at 1.1696, as is the Pound at 1.3130. Both are off their highs for the night though of 1.1745 and 1.3172 respectively. So, the USD hasn’t had a bad night.
On the commodity bloc the rally in copper and base metals more broadly, the lift in basic materials stocks, and a generally more positive tone has helped the Aussie dollar hold yesterday’s post-building approvals gains. AUDUSD is at 0.7430, off a high of 0.7440. Kiwi is 0.6816, down 0.1% and USDCAD has fallen 0.26% after the Canadian economy recorded stronger GDP growth than expected in May data released overnight showed. USDCAD is at 1.3003.
Oil was lower. It’s a classic fit the narrative to the move. Because even though the Trump entreaty was out this time yesterday, his offering to meet the Iranians is being blamed for the fall. Forget about Rouhani’s repudiation of the offer. Anyway, WTI is down 2% to $68.74 and Brent is off 1% to $74.96. That could be it folks. Copper rose 1.6% to $2.8225 and gold is at $1224.
Bitcoin is off again. Stalled below very important resistance for a week, momentum has waned and prices fell 5% overnight to $7724. Speaking of stalled momentum, US 10’s are at 2.96%, 2’s are at 2.67%, and the curve is at 29 points.
On the day today we get New Zealand employment and labour costs this morning and then it being the start of the month we get the raft of manufacturing PMI’s across the globe. Here in Australia we get the AiGroup’s version. Also, out is an RBI decision on interest rates. Tonight, it’s the ISM in the US I’ll be watching closely along with where Europe is at and then tomorrow morning at 4am my time the Fed will do nothing the market is betting.
Have a great day.
Macro Stuff that affects everyone and everything – either today or eventually
Have a great day's trading.
Chief Market Strategist
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With the Fed content to frame rising US treasury yields as an echo of economic optimism, bond markets take a breather while oil prices have blown off course