Investors awaiting negotiations outcome

14 February, 2019

Investors in Asia are sitting on the sidelines as they cautiously await the outcome of high-level trade talks between the U.S. and China. With the earnings season almost coming to an end, asset prices will begin to fluctuate on daily news headlines. So far, it seems we have more positive than negative news which may continue to support equities.

President Donald Trump is willing to extend the trade deal deadline if the two parties seem to be coming closer to a resolution. A good outcome from the expected meeting on Friday between China’s President Xi Jinping and his counterparts U.S. Treasury Secretary Steven Mnuchin and trade representative Robert Lighthizer may further prolong the rally in global equities.

Mr. Trump also intends to sign a U.S.-Mexico border security deal despite the fact he’s not happy with it. Any news on avoiding another shutdown is welcomed by the markets.

On the data front, U.S. consumer prices remained steady for a third straight month in January. Stable prices have led y-o-y CPI to grow at its slowest pace in one and a half years suggesting that the Fed may keep interest rates on hold for some time if the economic outlook deteriorates further. However, the Dollar reacted positively to the data, given that when excluding the volatile components such as food and energy, the core-CPI stood at 2.2%. Such information may be conflicting in a sense that headline inflation doesn’t require further tightening in monetary policy, while core inflation indicates that we cannot rule out further hikes later this year.

Commodity currencies were the main beneficiaries of stronger than expected Chinese data earlier today. Chinese exports rebounded sharply in January rising 9.1% y-o-y beating consensus of a 3.2% decline by a wide margin.  Imports, while dropping by 1.5%, also showed much better than the expected 10% decline. The Australian Dollar and New Zealand Dollar were up 0.5% at the time of writing.

The Euro continued to struggle despite the improved appetite to risk. The single currency tested 1.1249 earlier today on the back of a series of disappointing data releases and political uncertainty. The latest political drama comes from Spain, which is heading into a snap election following a budget defeat. If a right-wing coalition takes over, expect to see more troubles ahead in the Eurozone. Other factors that contributed to Euro weakness include the continued plummeting of German Bond Yields. All maturities below 10-years are currently in negative territory, while 10-year yields are just 12 basis points above the zero line, compared to 2.7% in the U.S. All eyes are going to be on German GDP today to see if the country manages to escape a technical recession. Meanwhile, the Eurozone economy is expected to have grown 0.2% in Q4.


Source  
Crude Oil Daily: Bullish Activity on the rise11 May, 2020  

The price of Crude Oil, on the D1 time-frame, was in a lengthy downward spiral until April 21 when a lower bottom was recorded at 9.87. This extreme all-time low...

Is lightening set to strike twice for U.S. oil price?28 Apr, 2020  

Investors keeping their fingers crossed as hope builds following gradual steps from world governments to slowly loosen lockdown restrictions will eventually...

Darker mood awaits oil markets after WTI Crude collapse21 Apr, 2020  

WTI Crude has depreciated 7% today and more than 80% since the start of 2020. Prices are heavily bearish on the daily timeframe with the technical and fundamentals...


A raft of disappointing economic data16 Apr, 2020  

After climbing to a one month high on Tuesday, the S&P 500 declined 2.2% yesterday and more losses are set to follow today with futures indicating a lower open...

Oil restores gains as OPEC+ set for emergency meeting3 Apr, 2020  

Brent futures erased earlier losses on Friday amid reports that OPEC+ is set to hold an emergency virtual meeting on Monday to stabilise global markets...

Volatile quarter comes to an end31 Mar, 2020  

It has been an historic and volatile trading quarter defined by the novel coronavirus outbreak, with unprecedented central bank intervention, government...


You wouldn't catch a falling knife11 Mar, 2020  

Monday 9 March 2020 will forever be remembered as a dark day for global financial markets and only investors with an extreme high appetite towards...

OPEC agrees on large output cut6 Mar, 2020  

The run-up to the OPEC meeting on Thursday was rather anti-climatic with Oil barely moving despite the cartel proposing deeper production cuts...

Asset correlations not making sense20 Feb, 2020  

US and European equities are at record levels and US Treasuries are trading close to their October highs; meanwhile, gold prices have climbed to a new...