News & Analysis

GO Daily News: Thursday 10/01/19

January 10, 2019

By Deepta Bolaky

Key upcoming events (GMT+2)

01:50 Foreign Investment in Bond and Stocks (Japan)
02:01 BRC Like-For Like Retail Sales (UK)
03:30 Consumer and Producer Price Index (China)
07:00 Leading Economic and Coincident Index (Japan)
11:30 BoE Credit Conditions Survey (UK)
14:30 ECB Monetary Policy Meeting Accounts (Eurozone)
15:30 Jobless Claims (US)
15:30 New Housing Price Index (Canada)
19:00 Fed’s Powell Speech (US)
23:30 AiG Performance of Construction Index (Australia)
23:45 Building Permits (Australia)

Equity Markets

More positive trade news is allowing the equity markets to keep up with the bullish momentum. The trade talks were extended into a third day, and a US Trade Representative informed the markets that China has pledged:

“To purchase a substantial amount of agricultural, energy, manufactured goods, and other products and services.”

The markets are expecting more details to emerge during the course of the week. In the meantime, the positive sentiment drove the rally in the European markets and on Wall Street on Wednesday: 

  • European Stocks: Trade hopes helped major European indices to clock another day of gains. 
  • US stocks: Wall Street extended gains despite the last-minute breakdown of talks regarding the US government’s partial shutdown. It is reported that President Trump stormed out of a meeting with congressional leaders. The shutdown is on its way to become the longest in US history if it persists throughout the week. Meanwhile, the FOMC minutes released yesterday also echoed the dovish stance of Powell which helped equities to push higher. 
  • Asian stocks: Unlike yesterday, the rally in the Asian markets appears to be stalling on Thursday following a lack of concrete details on the three-day negotiations. The steepest is currently being seen in Japan as of writing.
  • Australian Share market: The Index rose by 0.97% on Wednesday even though the banking sector underperformed. The credit crunch will create a challenging environment for the banking sector, and investors will be worried about the prospect of a banking crisis. The trade optimism has somewhat faltered, and the benchmark is currently trending lower. Even though the Fed risk has reduced, China’s slowing economy is a bigger concern that will underpin sentiment.

The confidence seen during the first half of the week has primarily been driven by the hopes behind the trade negotiations but a lack of details on the third day may weigh on risk sentiment in the upcoming sessions.

Currency Markets

The FOMC minutes and the Fed put the US dollar on the back foot as it echoed the market’s expectations of a cautious approach by the Fed. The US dollar index dropped below the 95 levels.

  • The Antipodeans: The price action of the Antipodeans was mostly driven by the US dollar amid a lack of local economic data releases. The AUDUSD pair is creeping higher, but the weak Chinese inflation figures left the Aussie fully exposed to potential downside moves.
  • The shared currency: The conservative approach by the Fed is helping other rival currencies to find buyers. EURUSD rose above 1.15 but is still trading below a key resistance of 1587 which is the high last seen in October 2018. 
  • The British Pound: The Cable is also trending on the upside but is finding resistance around the 1.28 region. Any gains will be limited underpinned by the UK political instability and Brexit headlines. 

GBPUSD (H4 Chart)

Source: GO MT4

Commodities Markets

The positive sentiment in the oil markets helped WTI and Brent oil to push higher above $50 and $60 respectively. However, the EIA report showed a decrease of 1.7 million barrels which felt short of the forecasted 2.8M barrels. Oil prices have slightly pulled back since the EIA reports.

UKOUSD and USOUSD (H4 Chart)

Source: GO MT4

Friday, 11 Jan 2019
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0 0 0.007 0.012 0 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 0