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 (8.01am Thursday August 30)
Good news – genuinely good news for markets and the global economy overnight.
If you think about the handbrake on sentiment over the past 6 months or so it’s mostly about the handbrake on growth and the uncertainty that the trade wars have caused with a little added worry about what Brexit might look like.
So news overnight that we could have Canada in a new NAFTA deal by the end of this week and that the EU is ready to offer the UK an unprecedented deal is goo news for markets. And for the global economy.
The result has been a solid bounce in US stocks with the S&P 500 up 0.57% to fresh record highs and a close at 2,914 for a 0.58% gain. The Dow is higher as well at 26,124, up 0.23%, while the Nasdaq 100 surged 1.17% to 7,658.
Stocks in the UK didn’t enjoy the news that there might be a decent Brexit deal coming with the FTSE 100 posting a 0.7% loss. Perhaps the Pounds 1.2% surge in GBPUSD terms to 1.3031 and 1.1% surge in EURGBP terms which fell to 0.8985 after going vertical and then breaking the support I highlighted in Forex Today yesterday. On the continent the DAX rose 0.27% and the CAC rose 0.3%.
Here in Australia the ASX 200 surged back to 6,352 for its best close in a decade yesterday and overnight SPI traders have added another 16 points which implies a new decade high today. If the globe is going to be positive then why shouldn’t the local market – especially when the Aussie dollar is lagging at 73 cents.
To forex now and as discussed GBP was the big mover against the USD and then on the crosses. That move has also resonated in a weaker USD against many pairs (even though US Q@ GDP was upgraded to 4.2%) which came off their overnight lows – the USD was stronger earlier – at the time the Pound started to rock and roll. As a result the Euro is at 1.1705 off a low of 1.1653 for a 0.12% gain. USDJPY is up 0.43% at 111.66 as risk appetite rises and the need for a safe haven evaporates.
Of the commodity bloc the Aussie is again the laggard with a 0.3% loss to sit at 0.7313 this morning after a low in the mid 0.7270’s last night. You have to think the Westpac rate hike has folks worried about the domestic economy. The Kiwi is up 0.1% to 0.6712 while the CAD is at 1.2909 in USDCAAD for a 0.15% gain against the Greenback.
Oil surged overnight after a bigger than expected draw and the faster than expected reduction in Iranian exports I highlighted yesterday. WTI is at $69.71 up 1.72% while Brent is at $77.35 for a 1.84% gain. Copper lost a little less than 1% in HGc1 terms to $2.7085 while gold bounced back with a $6 rally to $1207 for a half a percent gain. The CRB is up 0.65% while the CRB equity index is up 0.32%.
Bitcoin is at $7000 down about $100 bucks from this time yesterday while US 10’s are stable at 2.89% while the 2’s are at 2.68% for a 21 point curve.
On the data front today the release of CapEx for the second quarter is a big deal for the Aussie as it will be an important input in the soon to be released GDP for the quarter. Building approvals is also out as is retail sales in Japan and Kiwi business confidence and building permits. Tonight its German import prices, unemployment, and inflation while credit and mortgage lending data is out in the UK. Euro area business and consumer confidence are out as is Canadian Q2 GDP. And then we get PCE prices, income and spending data out of the US.
That’s plenty to get our teeth into – 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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