It was a wild ride on Wednesday, led by oil and the metals but extremely volatile elsewhere with the US stockmarkets falling by around 2% and then regaining all of their losses to finish more or less flat on the session. The DJI recovered almost all of its early 600 point loss in what was a rollercoaster session. Bond yields did much the same, with the US10Y plummeting to 1.593% before a sharp recovery as traders took a more positive view on risk, to finish pretty much unchanged at 1.72%. The German 10Y yield fell to -0.59%, the lowest level on record.
The currency markets were also busy, with the RBNZ kicking things off yesterday by surprising the markets with a 0.5% rate cut, but aside from the Kiwi which is lower, most currencies have also come back to settle pretty much where they were 24 hours ago. India and Thailand also saw rate cuts yesterday. The US$ did see some weakness during the session when Donald Trump’s Twitter account reiterated his accusations that the Federal Reserve is not cutting rates fast enough. Trump tweeted that the Fed needs to “cut rates bigger and faster,” and that “our problem” was not China, but the Fed.
Gold traded up to 1510 as safe haven demand took control because of the ongoing uncertainties being raised over the possibility of a fully blown trade war, while Silver rallied by 4%, to 17.25.
WTI collapsed to 50.50 after an unexpected build, of 4.4 million barrels in US stockpiles, ahead of a sharp bounce, to finish the day at 52.30 once Saudi Arabia contacted other oil producers to discuss ways to halt the slide in prices.
Looking ahead, Thursday will focus on political headlines from the US/China, with regards to trade, as the economic calendar is thin. The main event of the day will be the China July Trade Balance which may create some volatility (exp $40 bio, Imports -8.3%yy, Exports -2.0%yy), but that aside there is nothing to come from Europe (Economic Bulletin) and little from the US (Jobless Claims, Wholesale Inventories (exp 0.2%mm)) so it will be another day of staring at Twitter for inspiration. have a good day.
Economic data highlights will include:
Thur: Japan Bank Lending, Eco Watchers Survey, Current Account, China Trade Balance, US Jobless Claims, Wholesale Inventories,
Market moves, in brief:
FX: DXY 97.61 (+0.03%)
Bonds: US10Y; 1.717% (+1.03%), German 10Y; -0.582% (-8.77%), UK 10Y; -7.19% (0.479%), Australian 10Y; 0.972% (-7.4%), NZ 10Y; 1.17% (-10.69 %), China 10Y; 3.048% (-2.34%)
Stock Indices: DJI; -0.09%, S+P; +0.08%, NASDAQ; +0.38%, EUStoxx50; +0.56%, FTSE100; +0.38%, Shanghai Composite; -0.32%,
Metals: Gold $1500 oz (+2.05%), Silver $17.09 oz (+4.00%), Copper $2.571 lb (+0.53%), Iron Ore $96.56 per tonne (NYMEX) (-2.96%),
Oil: WTI $52.33 pb (-2.00%)
|INDICES / COMMODITIES|