4 October, 2016
Asian equities were mixed on Tuesday after Wall Street ended yesterday in red and investors continued to digest news that the UK will begin its official departure from the EU in March 2017.
Better than expected manufacturing data from the U.S. was not welcomed news by investors as it strengthens the case for a Fed rate hike by year end. The ISM manufacturing index rose to 51.5 in September after dipping into negative territory in August, and beat expectations of 50.3.
Although the employment component of the index fell short of 50 level, indicating jobs are still contracting in the manufacturing sector, new orders and output spiked higher suggesting that business conditions are slowly improving.
The U.S. dollar was the major beneficiary of the improved data and traded at two-week high of 95.95. The greenback was also supported by comments from Fed’s Loretta Mester who suggested the case for a hike in borrowing costs remain compelling at next meeting in November. I still don’t buy a November rate hike, but the possibility of it happening relies on big surprises on Friday, especially if the economy added more than 200 thousand jobs in September and wage growth exceeded 0.3%.
Yields on U.S. 10-year treasury bonds rose for a third straight day to trade above 1.62. The higher the yields go from current levels the more believe in markets that rates in the U.S. will rise which will continue supporting the greenback on the short-run.
RBA’s decision to hold rates steady today did not surprise the markets, and the statement didn’t show any material changes from September, only couple of rephrased sentences. The only major change was the governor of the RBA Philip Lowe who replaced Glenn Stevens. This explains why the Aussie was little moved by the central bank’s decision.
Looking ahead into the European session, Deutsche Bank will likely steal the show with the return of German markets from Unity Day. The stock received a 14% boost last Friday on hopes that the bank will get a 60% discount on previous announced settlement amount of $14 billion from U.S. Justice Department, but with no updates so far on the case, expect the stock to remain on a roller coaster.
U.S. equities kicked off the trading week with two indices, the Nasdaq Composite and the Russell 2000, hitting new record highs. This impressive performance...
U.S. investors got overexcited on Monday after Treasury Secretary, Steven Mnuchin, announced over the weekend that the trade war with China...
Asian stock markets fell while the Japanese Yen held steady, as investors closely monitored tense trade talks between the United States and China, in Beijing...
We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have...
The fall in tech stocks and escalating trade tensions continued to rattle markets after the Easter break. The S&P 500 fell 2.2% on the first trading...
The US dollar lifted today on the back of Powell's first address to congress in relation to his new appointment to the head of the Federal Reserve...
For oil bulls they've not been this high since 2015 and it's seeming like we may continue to see further highs in the long run. So far oil has pushed through resistance at 62.12 and is now...
The latest FOMC minutes have given the bulls something to be happy about, as the FED once again looked to keep the pace of rate hikes in the near future.
It's been a positive day for US economic data as retail sales surprised analysts lifting to 0.2% (0.0% exp). This shows a strong build up in the period...