The action on Wednesday was in the stock markets, where the US and European indices suffered their sharpest one-day declines in nearly six weeks after the release of the US-ADP employment and manufacturing data, which suggested that the ongoing tensions seen in the US/China trade war is further hurting the U.S. economy. On top of the 10 year low ISM figure of the previous day, Wednesday saw the ADP report showing growth of 135k in private sector jobs in September, below expectation of 140k, and comes ahead of tomorrow’s NFP report. This caused a general sea of red through the various asset classes, where the bigger moves were seen in Gold /Silver and the Jpy – as safe haven demand set in, while US Treasury yields were sharply lower and WTI fell by 2.5%, as an economic slowdown looms on the horizon.
The US$ has been choppy but is generally not too far removed from previous levels against the other majors, with the exception of the Jpy, which has seen strong demand on the back of risk aversion. The Euro is a little higher, while the Chf was sold off sharply, allowing US$Chf to briefly touch a new 6 month high, ahead of a sharp reversal as safe haven demand set in. The Aud$ made an attempt to take out the new 10 year low set in the previous session but has since recovered to sit unchanged from yesterday’s Australian close.
Thursday will begin with the Australian Services/Composite PMIs, which will then be followed by those of Japan, the EU and then later, the US. Also on the agenda today will be the Australian Trade Balance, the EU PPI and the ISM US Non Mfg PMI. A couple of Fed speakers are due; Evans/Quarles/Clarida, while the ECB’s de Guindos and the BOE’s Tenreyro are also on the card.
Economic data highlights will include:
Thur: China National Holiday, NZ Commodity Price Index, Australian/Japan Services/Composite PMIs, Trade Balance, Fed’s Evans Speech, EU PPI, Retail Sales, EU/US Services/Composite PMIs, US Factory Orders, Jobless Claims, Fed’s Quarles Speech, ISM Non Mfg PMI
Market moves, in brief:
FX: DXY 99.04 (-0.14%)
Bonds: US10Y; 1.602% (-2.41%), German 10Y; -0.548% (+2.42%), UK 10Y; 0.413% (+4.71%), Australian 10Y; 0.978% (-0.17%), NZ 10Y; 1.071% (-4.2 %), China 10Y; 2.135% (+0.33%)
Stock Indices: DJI; -1.86%, S+P; -1.80%, NASDAQ; -1.56%, EUStoxx50; -2.98%, FTSE100; -3.23%, Shanghai Composite; -0.92%,
Metals: Gold $1499 oz (+1.41%), Silver $17.56 oz (+1.90%), Copper $2.5695 lb (+0.35%), Iron Ore $92.26 per tonne (NYMEX) (+0.11%),
Oil: WTI $52.52 pb (-2.63%)
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