Thursday was a rather volatile session on the back of the escalating trade tensions between the US/China, not helped by an exchange of accusations over Huawei, with traders becoming increasingly concerned over future economic growth trends after a series of weak data from both the EU and the US. The technology sector did not like it and led the stock markets lower, with the US indices falling by 1.2%-1.6%, while oil also had a tough session, down by 5%. The metals were the main beneficiary, as safe haven demand returned, with Gold/Silver up by around 1%.
In FX, the currencies were volatile, and having made a new 2 year high in the DXY, the US$ has since retreated rather sharply to currently sit at 97.85. The Yen and the Chf were the main beneficiaries, but the Euro, after dipping to a 1.1106 – last seen in June 2017 – on the back of some weak EU PMIs., has since reversed sharply higher due to some weak US data, which did little to help the US dollar.
In terms of the day’s data, the Eurozone manufacturing PMI dropped to 47.7, down from 47.9 and missed expectation of 48.1., while the services PMI dropped to 52.5, down from 52.8 and also missed expectation of 53.0. Later on, the US manufacturing PMI dropped to 50.6, down from 52.6 and missed expectation of 52.5 while the US New Home Sales fell by 6.9%, as opposed to the expected 2.5%
Friday will see a thin calendar, with just the NZ Trade Balance (exp +$4 mio mm, -$5.47 bio yy) and the Japan National CPI to come for Asia, the UK Retail Sales (exp -0.3%mm; +4.6%yy) from Europe, and then the US April Durable Goods Orders (exp -2.0%mm), which may drive a bit of activity, although politics and risk sentiment are likely to be the main driver of activity. The EU election results will be known by Monday, at which time the UK could have a new PM so beware of some gapping in Cable on Monday. Have a good weekend.
I will be travelling for most of next week, so there will be no reports, but normal service resumes the following week.
Economic data highlights will include:
Fri: NZ Trade Balance, Japan National CPI, UK Retail Sales, US Durable Goods Orders,
Market moves, in brief:
FX: DXY 97.87 (-0.22%)
Bonds: US10Y; 2.322% (-2.57%), German 10Y; -0.120% (-42%), UK 10Y; 0.954% (-6.1%), Australian 10Y; 1.591% (-3.35%), NZ 10Y; 1.775% (-1.11 %), China 10Y; 3.31% (+0.21%)
Stock Indices: DJI; -1.10%, S+P; -1.20%, NASDAQ; -1.60%, EUStoxx50; -1.75%, FTSE100; -1.40%, Shanghai Composite; -1.35%,
Metals: Gold $1284 oz (+0.80%), Silver $14.59 oz (+1.01%), Copper $2.6835 lb (+0.22%), Iron Ore $97.31 per tonne (NYMEX) (+0.28%),
Oil: WTI $ 58.17 pb (-5.10%)
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