US China reconciliation stutters

20 November, 2019

Asian stocks are painting a sea of red, as investors grow skeptical that the US and China can exhibit enough will to sign a limited trade deal by next month. Most Asian currencies are now also weaker against the US Dollar, while safe havens such as Gold and the Japanese Yen are advancing.

Given that the US Senate has just passed legislation in support of the Hong Kong protests, such a move threatens to drive a wedge into ongoing US-China negotiations while potentially raising the barrier to a trade deal. Considering that the US and China are struggling even to agree to “phase one”, which had been deemed as more digestible, hopes for a swift conclusion to the trade conflict have clearly been misplaced. The drawn-out nature of “phase one” only points to bigger obstacles ahead, if and when trade talks enter phase two. In order to maintain the current levels of risk appetite in the markets, trade talks must bear fruit soon, or risk investor focus shifting back to the gloomy economic data, as further evidenced by Japan’s October exports seeing its sharpest drop in three years.

Pound offers lukewarm response to Johnson-Corbyn debate

GBPUSD offered a tepid immediate response to the first televised debate of the current UK election campaign, while the Pound is now weaker against most Asian currencies. The historic exchange between Boris Johnson and Jeremy Corbyn presented scarce fresh insights, with the snap poll following the debate suggesting that there was no clear winner, which offered Pound traders little to hang their hats on.

With Sterling’s latest assault on the 1.30 level versus the US Dollar falling short yet again, the currency pair had moderated in the hours leading up to the debate, before settling just above the 1.29 mark at the time of writing. The Pound has also come off its strongest level against the Euro in six months, only to post slight gains versus the bloc currency during the debate. Over the next three weeks, expect the Pound to remain primarily swayed by the political nuances during this campaigning period.

Gold gains as markets begin to doubt trade deal prospects

Gold has broken back above the $1470 psychological level, amid dimming hopes of a US-China trade deal. Bullion is expected to end the year with its double-digit annual gain intact, even in the event of a signed limited US-China trade deal. While not a base case for most investors at present, a complete capitulation in ongoing trade talks should send Gold surging back above $1500 while potentially paving the way for a global recession.

Investors contemplate coronavirus threat

Asian stocks and currencies are mixed as investors grapple with the extent of the coronavirus outbreak and its potential implications on the global economy.

Is Netflix under threat from rival streaming giants?

Grab your popcorn and find a seat ahead of Netflix's fourth-quarter earnings report, due to be released after the US...

Market caution returns ahead of Davos summit

Asian shares flashed red on Tuesday as concerns about the economic impact of a coronavirus outbreak in China drained risk appetite...

US and European stocks hit new records

Three weeks into the new year and equity bulls remain well in control. Wall Street continued to post new all-time highs with the S&P 500 up more than 3%...

China data point to economic stability

Asian stocks and currencies are mixed, despite global investors being given positive signals on the world's two largest economies. US retail sales...

US equities unmoved by US-China trade deal

The long-awaited "phase one" trade deal has finally been signed. After two turbulent years of trade disputes that have weighed on the global economy...

Tesla stock blast through the roof

Tesla Inc. stock was the talk of the town this week after exploding to an all-time high above $545. A wave of optimism over the company's performance...

Earnings season kicks off

Corporate earnings season kicked off with a bang on Tuesday as JPMorgan Chase & Co, Citigroup and Wells Fargo released their fourth-quarter earnings.

Asian assets mixed ahead of US-China trade deal signing

Asian stocks and currencies are mixed leading up to the long-awaited signing of the limited trade deal between the US and China, amid concerns that major...