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Market evolution

___MarketEvolution4

August 7, 2019

Asian equities are mixed with China fixing the yuan exchange rate slightly lower than expected

On Wednesday, August 7, the Asia-Pacific stock market showed a mixed tone, as investors were watching the Chinese yuan amid the intensifying U.S.-China trade dispute.

The People’s Bank of China set the official benchmark for the yuan at 6.9996 per dollar, which was slightly lower than market expectations. China’s central bank allows the exchange rate to rise or fall by 2% from that benchmark.

Mainland Chinese equities changed little at the end of the session. Japan’s Nikkei 225 index fell slightly, while robot manufacturer Fanuc lost 1.72%. South Korean Kospi traded slightly lower, with shares of chip maker SK Hynix up 2.64%. In Australia, the S&P/ASX 200 was up 0.77%.

In Hong Kong, the Hang Seng index fell slightly. Shares of Hong Kong-listed Chinese electric vehicle manufacturer BYD fell by 4.88% after the Company reported that its July sales volume fell by about 17% compared to the previous year.

U.S. equities rose on Tuesday, August 6, after the Central Bank of China indicated it wanted its currency to trade at a higher than expected level against the dollar. This alleviates fears that China will use its currency as a weapon in the trade war.

China responded on Monday to increases in U.S. tariffs by allowing its currency to weaken beyond the line of seven yuan per dollar. This fact led Washington to call Beijing a ‘currency manipulator’. Market sentiment deteriorated sharply, benefiting the yen as a safe haven currency and accelerating the yuan’s decline as there does not appear to be a solution to the conflict at the moment.

Risk sentiment was hit again after the Reserve Bank of New Zealand surprised traders by cutting interest rates more than expected. This underscores the growing concern of policy-makers for the global economy.

The dollar fell against the yen and the yuan weakened, indicating that investors continue to fear that China’s monetary policy has become a new turning point in its trade war with the United States. The EUR remains at $1.1202, unchanged during the Asian market.

Oil prices stabilized on Wednesday after falling at the start of the session. Potential damage to the world economy and fuel demand remains a concern. Oil prices remain under pressure as investors face the impact of the trade dispute.

During Wednesday’s Asian session gold peaked more than six years ago, while the China-U.S. trade war shows no signs of resolution. This increases the attractiveness of safe-haven assets. Trade wars are the catalyst for the latest developments. Goldman Sachs said he no longer expects a trade agreement before the 2020 U.S. presidential election.

European markets are expected to open up Wednesday’s session.

___MarketEvolution8 China stabilizes its currency

U.S. Stocks rebound from the worst day of the year after China stabilizes its currency.

U.S. equities rose on Tuesday, August 6, after the Central Bank of China indicated it wanted its currency to trade higher than expected against the dollar. This alleviates fears that China will use its currency as a weapon in the trade war.

The stabilization of the trade war between the United States and China is now the most important key to a better balance in global markets.

If the escalation continues there will be further setbacks, independent of central banks. A further 25 to 50 basis points of Fed interest rate cuts are unlikely to offset the effects of a prolonged and growing trade war.

European equities remain stable after the strengthening of the Chinese currency

European equities changed little on Tuesday, August 6, after the Central Bank of China returned the yuan’s official benchmark to a higher level than expected.

The Stoxx 600 pan-European index hovered over the flat line during the afternoon trade, with household goods stocks covering the luxury sector exposed to China leading the winners. The luxury brands LVMH, Christian Dior and Hugo Boss saw their shares listed on positive territory.

Tuesday’s German industrial data also brought some relief. Industrial new orders rose 2.5% m-o-m in June. Nonetheless, they are still down 3.6% for the year.

PMI (Purchasing Managers’ Index) data from the July construction for Germany stood at 49.5. It is below June’s 50.0 and falls into contraction territory for the first time since October 2018.

___ContexGen_07ago

China fires the biggest warning so far in the trade war

Now it’s up to Trump to decide how far he wants to go.

China has added its currency to the weapons it is willing to use in the trade war against the United States.

The American president’s latest move in the trade war brought what strategists say is China’s strongest response to date.

Investors are now leaving the risk markets and rushing into safe securities such as Treasury bonds.

The risks of a global recession are now greater than before.

Investors are watching the currency market closely for more moves from the Chinese.

As far as the trade war is concerned, the next moves will have to be given by the US, which labelled China as a ‘currency manipulator’.

Former Federal Reserve presidents call for independent central bank

Volcker, Greenspan, Bernanke and Yellen, the four former Federal Reserve presidents, called for an independent central bank in the face of repeated attacks by President Donald Trump.

‘We are united in the conviction that the Federal Reserve and its chairman should be allowed to act independently and in the best interests of the economy, free from short-term political pressures and, in particular, without the threat of impeachment or degradation of their leaders for political reasons.’

Former Fed leaders emphasized that the Fed’s powers are adequately controlled by Congress.

The U.S. president has repeatedly attacked the central bank and its current president, Jerome Powell, alleging that rising interest rates are holding back his economic plans.

This is where to hide in the midst of an increasingly intense trade war

The trade war between the United States and China has led many stovks to a free fall, in the face of surprise tariffs and currency devaluations.

The S&P 500 has fallen more than 5% since Trump imposed additional tariffs on China. The sale deepened after China retaliated by allowing its currency to fall to 7 yuan against the dollar.

For investors seeking refuge, there are stock exchanges that have done well during the market’s major setbacks in the past.

The 20-year iShares Treasury Bond ETF managed to earn more than 7% on average, while the SPDR Gold Trust rose more than 5% on average.

Utilities have been the best sector of the S&P 500 when the market has been in crisis.

Bond and gold funds stand out as the most profitable, as a major stock sale always triggers a move towards security.

Senators demand Google move temporary contracts to permanent after six months of activity

Ten U.S. senators are asking Google to take immediate steps to convert its growing number of temporary employees to permanent ones.

The lawsuit follows a New York Times report that said Google has 121,000 temporary workers and 102,000 permanent workers.

Temporary workers are, by definition, intended for short-term work and non-essential jobs. Senators urge Google to stop any abuse and treat all its workers equally.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution5

August 8, 2019

Asian equities advance as China sets yuan at lowest level since 2008

Asia’s shares traded higher on Thursday, August 8, as Chinese customs data showed a surprising increase in the country’s exports in July, despite the prolonged trade war with the United States. Investors are also watching the yuan, which has once again surpassed the psychologically important level of 7 yuan per dollar.

Mainland Chinese stocks rose, with Shanghai compound up 0.91% and Shenzhen compound up 1.04%. In Japan, the Nikkei 225 rose slightly. In South Korea, the Kospi appreciated by 0.98%. Australia’s S&P/ASX 200 recorded a very slight increase.

U.S. equities fell sharply on Wednesday, adding to the month’s heavy losses. The fall in global bond yields raised concerns about the slowdown in the economy.

The yen held steady on Thursday as world central banks surprised markets with sharp interest rate cuts. In addition, threats of a global economic slowdown continue, increasing the appeal of the Japanese yen as a safe-haven.

The New Zealand dollar and the Australian dollar recovered some of their strong losses from the previous session. On Wednesday, both currencies fell sharply after the Reserve Bank of New Zealand surprised the markets with a higher-than-expected interest rate cut and signaled the possibility of interest rates could become negative.

A growing list of central banks has softened monetary policy in an attempt to avoid the negative effects of the global growth slowdown, while falling yields have caused currencies to fall. Rising expectations of global monetary easing now weigh on currencies such as the dollar and the euro.

Oil futures rose more than $1 a barrel on Thursday, recovering half of the losses of almost 5% from the previous session. Expectations remain that the fall in prices could lead to cuts in production. Analysts maintain that crude oil prices are rising due to expectations that Saudi Arabia, the world’s largest oil exporter, and other producers from the Organization of Petroleum Exporting Countries could take steps to support the market by reducing supply.

U.S. crude oil inventories surprised investors. Oil reserves totalled 2.4 million barrels when a decline of 2.7 million was expected.

Gold rose again during the Asian session, after breaking the $1,500 mark in the previous session. It benefits from the fear of a global recession, anticipated by the monetary policies of central banks and by the reversal of the yield curve in the United States.

European markets are expected to open up Thursday’s session.

___MarketEvolution7 Uncertainty continues on Wall Street

Dow drops more than 300 points as uncertainty continues on Wall Street.

U.S. equities fell sharply on Wednesday, August 7, adding to the month’s heavy losses. The fall in global bond yields raised concerns about the slowdown in the economy.

Investors returned to safe havens such as gold, as they did on Monday, when stocks fell as high as a single day throughout the year.

Gold reached its highest point in more than six years while bond yields are collapsing.

Bank stocks, including JP Morgan Chase and Bank of America, led the falls. JP Morgan shares fell 2.8% while Bank of America shares fell 3.3%.

The banking sector has the most to lose from the fall in interest rates.

European equities abandon earnings as trade concerns persist and bond yields plummet

On Wednesday, August 7, the European stock market lost ground, as falling bond yields raised concerns about the global economic slowdown.

The Stoxx 600 pan-European index lost almost 1%, trading just below the flat line. Travel and leisure stocks were up 0.9%, while banks led losses with a fall of 0.8%.

The exact reason for the declines is unclear, but it occurred when bond yields reached all-time lows in Germany and while US Treasury yields plummeted and investors returned to safe havens.

Economic data was also in the spotlight, as Wednesday’s figures revealed that German industrial production fell at a much faster pace than expected in June. This fuels fears that Europe’s largest economy is headed for recession.

___ContexGen_08ago

Trade war leads to sale of 6 billion in emerging country stocks and bonds

The escalation of trade tensions between the United States and China has led to the outflow of $6.8 billion in stocks and bonds from emerging economies.

So far this week the outflow of capital from emerging economies is around 3,000 million dollars, after China responded to American pressures by dropping the yuan against the dollar to lows since 2008.

The president of the United States announced on Thursday that the American country will impose a new tariff of 10% on 300,000 million dollars of imports of products from China from next September 1.

This levy will be applied on the percentage of exports that are still exempt from tariffs, while the remaining 250 billion dollars will continue to be subject to a 25% tariff.

Will history repeat itself after the July rate cut?

Last week the Fed announced its first rate cut in ten years. This fact was widely discounted by the market.

President Powell has invited it to be seen as an adjustment of the cycle and not as the beginning of a new phase of cuts. Traders have not seen these statements as very credible.

Ultra expansive monetary policy, together with continuous buyback operations and the use of debt in a practically unsustainable way have been the factors that have allowed the creation of a prolonged bull market.

Although Powell is between a rock and a hard place, due to the very clear political pressures of President Trump, who wants a weak dollar to maintain a competitive economy, the above statements can be justified with the expectation of a slowdown in the economy from the middle of next year.

Mortgages rise in the face of a sharp drop in interest rates

Homeowners are quick to take advantage of a significant drop in mortgage interest rates.
The total volume of mortgage applications increased 5.3% over the previous week, and was 46.5% higher than a year ago, when rates were significantly higher.

The average interest rate on 30-year fixed-rate mortgage contracts declined from 4.08% to 4.01%.

For most Americans, a home is their largest investment and buying one is an emotionally charged decision. Getting potential buyers launched requires confidence in the financial future.

New missile tests by North Korea

North Korea said leader Kim Jong Un supervised a live-fire demonstration of short-range ballistic missiles.

These missiles have recently been developed with the intention of sending a warning to the United States and South Korea about their joint military exercises.

Korea’s Central News Agency said two missiles launched from a western airfield flew across the country and over the area surrounding the capital, Pyongyang, before accurately reaching a target off its eastern coast.

Its four rounds of weapons demonstrations in two weeks come during a stalemate in nuclear negotiations.

KCNA said Tuesday’s launches verified the reliability and combat capability of the new types of tactical guided missiles.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution0

August 9, 2019

Asian equities are mixed as food inflation in China soars and Japan’s GDP exceeds expectations

Asia-Pacific stocks were mixed on Friday, August 9, as China released data showing food inflation soared in July. On the other hand, the Japanese economy grew more than expected in the quarter ending in June.

Mainland China’s shares reversed in the afternoon after advancing at the start of the session. In Japan, the Nikkei 225 rose 0.55%. The South Korean Kospi index rose by 1.11% and the Australian S&P/ASX 200 also rose slightly.

Wall Street extends its rebound on Thursday, August 8, following good macro data from China.

The dollar fell 0.2% to 105.84 yen. The Japanese yen advanced Friday after the White House announced it would delay a decision to allow U.S. companies to do business with Huawei Technologies.

The yuan remained stable against the dollar after an alarming drop earlier in the week, and continues to be closely watched as traders watch Beijing’s response to escalating trade tensions.

The pound hit a two-year low against the euro after the media reported that new Prime Minister Boris Johnson is preparing to hold elections after the October 31 Brexit deadline.

Oil prices fell on Friday amid fears about demand. It does so despite the fact that prices gained some support on Thursday in the face of expectations of further cuts in OPEC production. Both Brent and West Texas rose more than 2% on Thursday to recover from January’s lows. Oil prices are down more than 20% from April highs.

During Friday’s Asian trading, gold remained firm, on its way to its best week since April 2016 in which it has gained 4.6%. The escalation of the trade dispute between China and the United States and fears of a slowdown in the global economy prompted renewed interest in safe-haven assets.

European markets are expected to open up Friday’s session.

___MarketEvolution7 Economic slowdown continue

Dow rises 200 points as Disney and technology stocks lead the market.

Wall Street extends its rebound on Thursday, August 8, after good macro data from China.

Chinese exports in July rose by 3.3%, well above the expected fall of 2%. In addition, imports for the same month fell by 5.6%, below the expected drop of 8.3%. This has caused the Asian giant’s current account balance to rise to $45 billion, above the anticipated $40 billion.

The economic slowdown and the trade war continue to worry the market, but on Thursday the situation was seen with more optimism. Thus, the New York Stock Exchange continues to recover after suffering its biggest fall of the year on Monday, with declines of 3%.

Donald Trump returned to Twitter to charge again against the Federal Reserve and says that the central bank is too proud to acknowledge its mistakes.

European equities rise as falling global bond yields stabilize

European equities traded higher on Thursday, August 8, as investors re-invest in risky assets and digest a range of corporate profits.

The pan-European Stoxx 600 rose 1.3% in the afternoon, while technology stocks rose 1.8%. All sectors and major exchanges traded on positive territory.

The fall in bond yields stabilised late on Wednesday, softening concerns about the slowdown in economic growth. The sharp rise in fixed income caused equity markets to fall in the previous session, with investors fleeing into safe havens.

The profusion of business results in Europe is also the focus of investors’ attention.

___ContexGen_09ago

Gold on its way to record highs

In the last few weeks gold has pulverized important levels of resistance and, with its logical intermediate corrections, everything suggests that it can return to the highs of 2011.

The strength of the precious metal is not from now, it comes from several months ago.

Exceeding the level of 1,346 dollars shot up the price of gold. Since then it has barely corrected within the sharp price escalation.

The precious metal now presents an important resistance at 1,525 dollars. Above that, there would no longer be any relevant resistance to the historic highs reached in 2011 at 1,920 dollars.

The possibility of ending up looking for historical highs in the medium term is a scenario that cannot be ruled out.

Crude Oil rebounds after trade war collapse

Crude oil rebounds with some vigour after its 5% drop on Wednesday. It is partially recovering from its heavy losses, waiting for lower prices to lead to a cut in production on a global scale.

Surprising US inventory data was released on Wednesday and the market now fears that the trade war is seriously affecting demand for this commodity.

The trade war will continue to mark the future of the markets, although any statement from Saudi Arabia can help stabilize prices.

Given the potential falls in crude oil if the trade war continues, it is more credible to imagine OPEC closing another agreement to further limit its production.

U.S. calls for caution for americans visiting Hong Kong

The U.S. government on Thursday stepped up its warnings to travelers to Hong Kong because of the growing violence surrounding pro-democracy protests in the Chinese city.

The State Department urges increased caution in Hong Kong due to civil unrest, and calls on travelers to avoid demonstrations and be cautious if they are unexpectedly close to large rallies or protests.

The crucial tourism industry in the territory has been affected as Australia, Ireland, Great Britain and Japan have also issued notices to their citizens.

Hong Kong police say a total of 589 people have been arrested in protests since June 9, ranging in age from 13 to 76. They now face charges that include rioting, carrying penalties of up to 10 years in prison.

So far, Beijing’s central government has not visibly intervened in the situation, although in editorials and public comment it has said that protesters and organizers of protests are criminals, clowns and violent radicals.

Salvini’s ultimatum in Italy

‘Either there are changes in the government or Italy will go to the elections’.

The deputy prime minister and leader of La Liga, Matteo Salvini, has threatened to dissolve the government coalition if Giuseppe Conte does not remove certain ministers from the cabinet.

Nervousness returns to the markets, where the 10-year-old Italian bond is the main culprit.

According to the daily Corriere della Sera, Salvini has given an ultimatum to Prime Minister Conte, giving him until Monday to make changes in government. He wants Conte to replace some ministers, including Giovanni Tria, the head of finance, because he sees them as a brake on the spending plans on the table.

For months that the shadow of the crisis plans on the Italian Executive, since La Liga was consolidated in the first position in the polls. Salvini used it to drop in more than one occasion that would have no problem if there is a new appointment at the polls.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution1

August 12, 2019

Chinese equities recover slightly as yuan continues to weaken

Mainland Chinese equities recovered slightly in the early morning hours of Monday, August 12, after a previous week of high volatility for world markets. Fears of an escalating trade war persist, dampening investor sentiment.

Shares of Hong Kong airline Cathay Pacific fell more than 4%. Riots in the city are in their tenth week and clashes between police and demonstrators continue. The Australian S&P/ASX 200 benchmark fell slightly, while major mining companies led the losses. Rio Tinto fell by 2.38% and Fortescue lost about 3%. South Korean Kospi recovered from previous losses and rose slightly. The markets of Japan, India and Singapore remained closed on holiday.

U.S. stocks traded lower on Friday, August 9, amid renewed fears about the trade war.

The dollar remained on the defensive against the Japanese yen, while the trade dispute between China and the United States continues without a solution in sight and while the holiday in Japan and Singapore caused a low level of operations. Goldman Sachs cut its economic growth forecast in the United States over the weekend, warning that it is unlikely that a trade agreement will be reached before the 2020 presidential election and that the risks of a recession are increasing.

All eyes are now on China’s retail sales and industrial production figures, which will be released on Wednesday. Beijing has allowed its yuan to relax in recent weeks, compensating for tariffs, putting pressure on emerging market currencies across Asia and boosting the yen.

The euro stood at 118.16 yen, very close to its lowest level since April 2017.

The pound hit a two-year low against the dollar after UK economic data showed an unexpected contraction in the second quarter. This adds to the pressure for a possible exit without agreement from the European Union.

Oil prices fell during Monday’s Asian session amid concerns about the economic slowdown and the US-China trade war. This has led to a cut in the outlook for oil demand growth. Last week Brent lost more than 5% and WTI around 2%.

Gold moved around $1,500 per ounce as the US-China trade dispute drags on and fears of a global economic slowdown increase. Hedge funds and capital managers recently climbed their bullish position in gold.

European markets are expected to open Monday’s session downwards.

___MarketEvolution10 Trump reduces hopes for trade agreement

Dow drops 250 points as Trump reduces hopes for trade agreement.

U.S. stocks traded lower on Friday, August 9, amid renewed fears about the trade war.

The S&P 500 and Nasdaq fell 1% during the week. The Dow dropped 1.4%.

President Trump said the U.S. will not do business with Huawei. He also said that his country is not ready to reach a trade agreement with China.

Just in case there was any doubt, President Trump has clearly moved from trade war to currency war.

Markets have had a volatile week, with major indices recording their biggest one-day sale of the year last Monday.

European equities close down as Italian banks sink in political turmoil

European equities closed lower on Friday, August 9, as investors followed closely the evolution of the trade war and the possible collapse of the Italian government.

The Stoxx 600 pan-European index closed 0.9% lower at the close of the session, with most sectors and major stock exchanges in red.

Banking stocks plummeted by 1.9%, dragged by Italian banks, while basic resources exposed to China and car stocks led losses, with a fall of more than 2.5% in both sectors.

Health stocks resisted the trend, standing just above the flat line.

Italy’s deputy prime minister and ruling party leader, Matteo Salvini, declared the governing agreement unworkable at present and called for new general elections.

Italy’s FTSE MIB closed down 2.5% at the end of Friday’s session as investors moved away from Italian assets amid growing political instability.

___ContexGen_12ago

Inflation in China rises to last year’s peak

China’s consumer price index, the main indicator of inflation, stood at 2.8% year-on-year in July. This is one tenth more than in the previous two months.

As in the previous month, the main protagonists of this year-on-year increase in prices were food, which rose by 9.1%.

In this section, fresh fruit again grabbed the attention, with an increase of 39.1% year-on-year. The pork, one of the products most demanded by Chinese consumers, suffered an increase of 27%.

The increase in non-food prices was 1.3%. It is one tenth less than the previous month.

Prices in services, health and education rose by 3.4%, 2.6% and 2.3%, respectively.

Japan’s GDP slows growth due to falling exports

Japan’s economy slowed its expansion between April and June, due to falling exports in the current context of trade tensions. However, it managed to grow by 0.4% compared to the previous quarter thanks to the boost in domestic consumption.

Japan’s gross domestic product grew by 1.8 percent in that period, compared to the same quarter last year.

Growth was boosted by increased household spending, which accounts for about 60% of the national economy.

Also noteworthy were increases in corporate capital investment and public spending. These last two sections constitute the key factors of ‘Abenomics’, which is the economic strategy of the Executive led by Shinzo Abe.

However, exports, the main muscle of the Japanese economy along with domestic consumption, fell by 0.2% compared to April-June 2018. Experts attribute this development to the slowdown in the Chinese economy, Japan’s main trading partner.

Germany’s exports fall in June

German exports fell by 8% year-on-year in June.

The volume of exports stood at 106,100 million euros, while imports reached 89,300 million euros, representing a decrease of 4.4% over the same month last year.

The trade balance closed June with a surplus of 16,800 million euros, clearly below the 22,000 million in June 2018.

Germany’s exports to all European Union countries reached 63.5 billion euros, a year-on-year decrease of 6.2%. Imports fell to 53.3 billion euros.

UK GDP shrinks in second quarter

The UK’s gross domestic product fell by 0.2% between April and June. It does so after growing 0.5% in the first quarter of the year and is its first decline since 2012.

The British economy contracted in the second quarter, shortly after the Bank of England lowered its annual growth forecasts due to the risk of a Brexit without an agreement.

Manufacturing fell after a strong start of the year, when production was brought forward to the original date for the UK’s withdrawal from the EU.

Between April and June, only the services sector contributed growth to the economy, while the production sector recorded a 1.4% drop in activity, its biggest drop since late 2012.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

1 Like

___MarketEvolution2

August 13, 2019

Asia’s stocks weaken as Hong Kong continues to deal with the crisis

Shares in Asia fell on Tuesday 13 August, while Hong Kong is trying to return to normal following protests in recent days. The escalation of the protests is inviting a greater response from the government, so the risk of further repression is on the rise and that will have implications for the market.

In mainland China, the Shanghai compound fell by 0.74%, while Shenzhen lost 1.03%. Amid the political turmoil in Hong Kong, Cathay Pacific saw its shares fall by more than 4%, while Bocom International downgraded its rating from ‘buy’ to ‘neutral’ because of the expected drop in demand due to continued unrest. On the other hand, Japan’s Nikkei 225 fell by 1.25% after returning from a holiday. South Korean Kospi fell 0.71%, while Australia’s S&P/ASX 200 fell slightly.

US equities fell on Monday, August 12, after bond yields resumed their decline, raising concerns about the state of the economy.

The Australian dollar rose slightly to $0.6759, while the Chinese yuan recovered after the People’s Bank of China set an interest rate at a new 11-year low.

Unrest in Hong Kong and fluctuations in Argentine markets increased risk aversion among investors and fuelled demand for safe-haven currencies such as the Japanese yen. The Japanese yen hit a seven-month high against the dollar on Tuesday in Asia.

The euro rose on Monday after Italian bond yields dropped from five-week highs after relief that Fitch left Italy’s credit rating unchanged.

Argentina’s surprising election results, which resulted in a fall in the country’s peso, stocks and bonds, have also weighed on the markets. The Argentine peso lost approximately 15% against the dollar on Monday. Fears of a possible return to interventionist policies and, by extension, a possible debt default, took hold of the market after Argentina’s conservative president, Mauricio Macri, lost by a much wider margin than expected.

Oil prices fell during Tuesday’s Asian session, offsetting the sluggish gains of the previous session. Fears about demand offset expectations that major producers will continue to limit oil production. Although the outlook remains bleak, oil prices have been supported this week after a quick response from Saudi Arabia on production.

During Tuesday’s Asian trading, gold reached record highs in more than six years. Protests in Hong Kong and the fall of the Argentine currency, amid fears of the global economic slowdown, led investors to move away from riskier assets. In addition, many central banks have extremely low interest rates and little room for manoeuvre to help their economies.

European markets are expected to open Tuesday’s session downwards.

___MarketEvolution8 Bond yields resumed their decline

Dow drops 390 points to below 26,000 again.

U.S. equities fell on Monday, August 12, after bond yields resumed their decline, raising concerns about the state of the economy.

The Dow Jones Industrial Average fell 391 points, while the S&P 500 fell 36 points. The Nasdaq Composite fell 1.2% to 7,863 points.

Bank equities declined as interest rates lost ground. Bank of America and Goldman Sachs fell more than 2%, while J.P. Morgan fell 1.87%. The SPDR S&P Bank ETF fell by 2.1%.

The Hong Kong protests also exerted their weight on the markets, damaging investor sentiment already aggravated by the trade dispute between Washington and Beijing. Hong Kong International Airport cancelled all departures for the day because of the protests.

European shares close down amid concerns over trade warfare

European equities closed down on Monday, August 12, with investors awaiting the escalation of the U.S.-China trade war.

The Stoxx 600 pan-European index closed with a slight drop. This index recorded a gain of almost 1% in the previous session. Banks dropped the most, led by a 5% drop in CYBG, while chemical stocks had the best results.

Trump’s national security advisor, John Bolton, arrived in London on Sunday for talks in which he is expected to urge Britain to take a firmer stance on Iran and the Chinese telecommunications company Huawei.

Investors will also be watching political developments in Italy after the League party of Deputy Prime Minister Matteo Salvini filed a motion of censure on Friday to overthrow the government.

___ContexGen_13ago

Pound falls to decade lows and is hard to avoid a Brexit without agreement

British Pound falls to decade lows against the Euro.

In addition to the bad GDP data released at the end of last week, there is now the opinion of experts who believe that the UK will not be able to avoid an exit from the European Union without an agreement.

The British currency is down around 0.5% which puts its cross with the euro at 0.9264, a level it has not reached since October 2009.

The combination of a slowing economy, global economic weakness, the growing possibility of interest rate cuts and the risk of a Brexit without an agreement will continue to weigh on the pound sterling.

The exit of the European Union without agreement is the biggest concern.

Some variables that influence markets

Investors will be watching to see how stocks react to key variables, such as the level of Treasury yields or the evolution of the Chinese currency.

Even more volatility is expected in the coming weeks, as the trading volume in August is small, making market movements more exaggerated.

However, the worst could already have happened, as some events are discounted and are yet to come.

Stocks could be trading at their highs again later this month. The stock market declines so far seem to have been mainly due to profit withdrawals by investors.

Italian parties date Conte’s censorship motion

Italian political parties decide the day on which the motion of censure should take place on Prime Minister Giuseppe Conte. The far-right League and the conservatives want it to be as soon as possible.

The spokespersons of the different formations in the Senate meet on Monday, while in the Chamber of Deputies they will meet on Tuesday.

The task will be to fix in the calendar the debate and vote of the motion presented by the League of the Minister of the Interior, Matteo Salvini, against the Government of which he himself forms part.

After Salvini broke up the government coalition last Thursday, after just over a year of governing together, Prime Minister Conte did not resign. And his place announced that he would go to Parliament to force the far-right leader to give explanations.

The League then announced a motion of censure with Parliament closed for holidays. The parties have now split into several blocs over the date on which the vote is to take place.

Hong Kong airport suspends departing flights due to protests

The authorities cancelled all departing flights after thousands of demonstrators occupied the airport terminal.

The airport authority attributed the cancellations to a large number of demonstrators preventing passengers from checking in.

All check-in services for departing flights have been suspended. With the exception of departing flights that have already checked in and arriving flights that are already bound for Hong Kong, all other flights have been cancelled.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution3

August 14, 2019

Asia-Pacific stocks rise following announcement that the United States will delay implementation of some tariffs

Shares in the Asia-Pacific region rose on Wednesday, August 14, as the United States announced a delay in the implementation of tariffs on some Chinese products.

Tensions in Hong Kong remained high after the city’s airport was interrupted for the second day in a row as a result of continued protests.

The shares of Apple suppliers in Asia skyrocketed on Wednesday, after the Cupertino-based technology giant saw its shares increase by more than 4%. This comes after the United States announced that tariffs on electronic products would be delayed until December.

American shares skyrocketed on Tuesday, August 13, after the U.S. decided to delay tariffs on certain Chinese products while removing some items from the tariff list.

The Japanese yen advanced during Wednesday’s Asian trading session, after falling sharply in the previous session, as discouraging Chinese economic data reinforced the view that the resolution of the trade war is a long way off, despite the delay in the application of some tariffs.

The yuan remained bearish against the dollar after China’s industrial production rose in July at the slowest pace in more than 17 years. The yuan onshore advanced against the dollar.

On Wednesday, oil prices fell due to discouraging economic data from China and rising crude oil inventories in the US, erasing some of the strong gains from the previous session. The deterioration in China’s industrial production and consumer spending suggests that the fundamental outlook is not very good and that energy demand may be under pressure.

Gold stabilized on Wednesday, consolidating around the key level of $1,500, driven by uncertainty over political risks such as riots in Hong Kong or global growth concerns. The easing of trade tensions has provided some kind of hope in markets that has boosted equities and negatively affected gold prices.

European markets are expected to open up Wednesday’s session.

___MarketEvolution8 Delay application of some tariffs to China

U.S. indices rise after U.S. delays application of some tariffs to China.

U.S. actions skyrocketed on Tuesday, August 13, after the United States decided to delay tariffs on certain Chinese products while removing some items from the tariff list.

The U.S. Trade Representative announced Tuesday that certain products, including clothing and mobile phones, are being removed from the tariff list on the basis of health, safety, national security and other factors.

Other tariffs will also be delayed until December 15. Products in this group include mobile phones, laptops, video game consoles, certain toys, monitors and certain apparel and footwear items.

The retail sector applauds the new measures.

European equities rise

European shares rose on Tuesday, August 13, after President Trump announced a delay in the application of some tariffs to China. The aim is to cushion its impact on U.S. Christmas sales.

The Italian Senate postponed until next week a new debate on the current government crisis, thus frustrating the efforts of the leader of the League party, Matteo Salvini, to hold new elections.

Meanwhile, Britain and the United States are discussing a partial trade agreement that could enter into force on November 1, just the day after the United Kingdom leaves the European Union.

___ContexGen_14ago

UK unemployment rises in June

Unemployment in the UK rose to 3.9% in June, up from 3.8% in the previous month. But it has fallen compared to the same month last year when it was 4%.

In the sixth month of the year, there were 1.33 million unemployed in the UK, 33,000 fewer than the previous year. Among men, the unemployment rate stood at 4.1% and 3.6% among women.

The employment rate has risen to 76.1%, the highest on record. For men it was 80.1%, with a decrease of 0.2 percentage points in the quarter. This is the third consecutive quarterly decrease. For women it was 72.1%.

With regard to the type of employment, the data show that more people worked full-time, although part-time work also showed an increase.

Wall Street sees further cuts in Federal Reserve interest rates

As trade tensions increase and economic indicators weaken, Wall Street is beginning to anticipate more aggressive cuts in Federal Reserve interest rates.

Morgan Stanley even predicts a return to zero.

Economists now see the likelihood of three-quarter-point cuts before the end of the year, along with multiple moves in 2020 until it becomes clear that the central bank has avoided a recession.

Goldman Sachs has just announced that it reduces its GDP projections by 0.2 percentage points and Bank of America’s Merrill Lynch says he sees growing possibilities of a recession in the next 12 months.

Bank of America increases chance of 1-in-3 recession in next 12 months

Based on the most recent data, American banks now see a recession probability of over 30% for next year.

The official model gives the probability of a recession in the next 12 months of only 20%. However, another model based on large amounts of data and events leads one to believe that it is closer to one possibility in three.

The uncertainty surrounding the U.S.-China trade war and the slowdown in the global economy have caused interest rates to plummet and affect major markets in recent weeks.

Last month’s employment report showed a good figure, but business investment is low as companies have to deal with tariff hikes and fiscal policy uncertainty.

Three of the five indicators that follow the economic cycles, automobile sales, industrial production and total hours worked, are at levels reached just before previous recessions.

Collapse in the websites of banks in Argentina and obstacles to change from pesos to dollars

Santander and BBVA have suffered falls in their digital channels, in the face of an avalanche of customers who wanted to close transactions.

The Spanish banks, with a presence in Argentina, argue that these are technical failures and that their activity in branches is being carried out normally.

Sources aware of the situation point out that, in the face of an avalanche of customers trying to access the digital channels of the financial sector, the systems have collapsed.

However, banks admit that people go into offices like crazy, complaining and asking what is going to happen now with their savings. The possibility of losing almost a quarter of their savings, due to the effect on the exchange rate, has mobilized the Argentine population.

After the victory of Kirchnerism in the first round of the presidential elections, the peso has suffered a sharp drop against the dollar. From one day to the next one has to pay 17% more for the exchange.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution4

August 15, 2019

Asian equities decline as bond markets warn of recession

Asian equities fell on Thursday, August 15, as the U.S. Treasury yield curve was reversed, raising fears about the state of the U.S. economy.

In mainland China, stocks fell at the end of the session. In Japan, the Nikkei 225 lost 1.56%. Australia’s S&P/ASX 200 index also fell by 2.61%, as data showed that the unemployment rate did not meet expectations. The South Korean and Indian markets remained closed on Thursday for holidays.

U.S. indices fell sharply on Wednesday. It was the worst day of the year for the Dow Jones Industrial Average, amid a sign of recession in the bond market. The U.S. Treasury yield curve was temporarily reversed on Wednesday, for the first time since 2007, a sign that is seen by investors as a sign of an upcoming U.S. recession.

Economic data from China and Germany suggest a global economic slowdown, hit by the US-China trade war, Brexit and geopolitical tensions.

The People’s Bank of China on Thursday set its official benchmark for the yuan at 7.0268 per dollar. The dollar fell to 105.86 yen and the yen advanced to its highest daily gain in two weeks.

Signs of the global economic crisis and falling Treasury yields led investors to take refuge in safe assets. Safe-haven currencies, gold, bonds and other low-risk assets could continue to receive a boost due to growing concerns about the global economy’s poor health. When volatility increases, the dollar/yen correlates strongly with Treasury yields, so the currency pair has more room to fall.

Oil prices fell on Thursday. U.S. crude oil inventories rose unexpectedly, recession fears are rising and economic data from China and Europe is disappointing. It is a combination of data that suggests a slowdown in global growth. Expectations are now being raised that major producers will be able to take additional measures to sustain prices.

Gold rallied during Thursday’s Asian trading as the U.S. bond yield curve alerted investors to the risks of recession. The prolonged trade war between China and the U.S. adds to fears of a global economic slowdown, increasing the attractiveness of safe-haven assets.

European markets are expected to open Thursday’s trading session lower.

___MarketEvolution7 It was the worst day of the year

U.S. indices fell sharply on Wednesday.

It was the worst day of the year for the Dow Jones Industrial Average, amid a sign of recession in the bond market.

The equity market fell sharply on Wednesday, August 14, dropping 800 points. The 3% drop in the Dow was the worst this year. The S&P 500 also fell almost 3%.

The sell-off was triggered by the bond phenomenon on Wednesday, in which the yield on the benchmark 10-year Treasury was briefly below the 2-year interest rate. The reversal of this key part of the yield curve has been a very reliable indicator of economic recessions.

Weak economic data around the world also fueled concern that the global slowdown could lead the US economy into recession.

China’s industrial output growth slowed to 4.8% in July from the previous year, the weakest growth in 17 years.

Germany experienced a negative GDP outcome, while growth in the euro area also slowed faster than expected.

European equities close with sharp decline due to weak data and warnings of bond market recession

European equities closed Wednesday 14 August with a sharp decline as weak economic data and investments in the bond yield curve fueled fears of a global recession.

The Stoxx 600 pan-European index provisionally closed with a 1.8% drop with all sectors and major exchanges in red.

Economic data released on Wednesday showed that Germany’s GDP contracted by 0.1% between April and June, fuelling fears of a recession for Europe’s largest economy and dampening investor sentiment.

This affected the rest of the bloc, with euro-zone GDP growth of only 0.2% quarter-on-quarter. This is a significant slowdown from the 0.4% growth recorded in the first three months of the year.

European bond yields followed those of the US Treasury down to new lows. 10- and 30-year German bond yields fell to historic lows, along with 10-year French yields. Meanwhile, the gap between the UK’s two- and ten-year bonds was reversed for the first time in more than a decade.

___ContexGen_15ago

The application of tariffs is delayed by the Christmas shopping season

The American president has said that he is delaying some tariffs on Chinese imports before the Christmas season.

The Trump administration announced that it would delay until December 15 some of the tariffs that were originally scheduled to come into effect on September 1.

If the application of tariffs has an impact on people, what will be done is to delay them, so that they are not relevant for the next Christmas shopping season.

Chinese industrial production grows at the slowest pace of 17 years

China’s industrial production expanded 4.8% year-on-year in July. It is one and a half percentage points lower than in the previous month.

The figure, well below analysts’ forecasts, is the slowest growth of this indicator since February 2002 and shows the weakness of domestic demand in the Asian giant.

The data suggest that economic growth faces renewed downward pressures.

Even with more favourable fiscal policies, construction activity will remain under pressure in the coming quarters as the recent boom in real estate development loosens.

Against this backdrop, the International Monetary Fund recommends that the Chinese government take fiscal measures to try to protect its economy.

Eurozone brakes

Eurozone gross domestic product grew 0.2% in the second quarter.

The symptoms of cooling in the region are successive and uncertainty, the result of the trade war and Brexit, is increasing.

A few days ago, growth moderation was brought forward to a rate of 0.2%, compared to 0.4% in the first quarter.

Job creation has lost pace to the same extent.

Compared to a year earlier, the eurozone economy grew by 1.1%. It is two tenths less than at the beginning of the year. For the European Union as a whole, growth was also 0.2% quarter-on-quarter.

The European Central Bank is preparing a large stimulus package against the weakness of the eurozone. The President of the ECB, Mario Draghi, has said that it is a question of halting a worsening economic scenario.

Industrial production data also suffered a contraction of 1.6% in the eurozone and 1.5% in the European Union in June this year compared to the previous month.

German economy shrinks and threatens recession

Concern for Germany returns. The German country has released the Gross Domestic Product figure for the second quarter, in which the economy contracted by 0.1%, which opens the door to recession.

The performance of the ‘European locomotive’, has been in line with what was expected by the consensus of analysts for the period between April and June.

The contraction has been caused by the fall in exports, as the country’s manufacturers have long struggled against lower external demand and trade disputes maintained by the United States and China.

The development of foreign trade slowed economic growth. Exports fell relative to imports.

The German Chancellor will have to unleash a new fiscal stimulus package for her country to combat these effects.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution5

August 16, 2019

Asian stocks slightly bullish as investors watch U.S. treasury yield

Stocks in Asia traded slightly bullish on Friday, August 16, with investors awaiting yields on U.S. Treasury bonds and events on the U.S.-China trade front.

Mainland Chinese equities advanced at the end of the session. Hong Kong’s Hang Seng index rose 0.8% with Ping An Insurance Group shares rising 2.98% after the Company announced its strongest earnings growth in more than a decade in the first half. In Japan, the Nikkei 225 recovered from a previous decline and moved slightly higher. In South Korea, the Kospi fell by 0.75% after returning from vacation. Shares of chip maker SK Hynix fell by 1.3% and LG Chem lost 1.39%. Australia’s S&P/ASX 200 traded slightly lower.

During Friday’s Asian trading, the dollar remained bullish after U.S. retail sales were positive. The U.S. dollar rose sharply against the Japanese yen and Swiss franc, as fears of recession and protests in Hong Kong affected financial markets.

The Yen fell during Friday’s Asian trading as Japanese equities lost ground and U.S. Treasury yields rose slightly. However, the move faded quickly, reflecting in part the lack of summer vacation activity.

The British pound was slightly bullish, heading for its first weekly gain since mid-July, as positive data on retail sales and consumer prices showed that the British economy is in better shape than some investors had feared.

During Asian trading on Friday, oil prices rose sharply after U.S. economic data showed an increase in retail sales. U.S. retail sales rose in July. Consumers bought a wide range of consumer goods, although sales of motor vehicles declined. The figure comes after a key part of the U.S. Treasury yield curve was inverted for the first time since June 2007, leading to equity sales and lower oil sales.

Gold fell sharply, but managed to advance for the third consecutive time, while fears of the global economic slowdown and lack of clarity regarding the trade war between China and the United States boosted the attractiveness of this metal as a safe haven. Gold is consolidating because none of the negative economic factors have disappeared.

European markets are expected to open up Friday’s trading session.

___MarketEvolution7 China says it will take necessary measures

Wall Street lengthens suffering and falls again after China’s threat.

China says it will take the necessary measures because U.S. tariffs violate the consensus.

Wall Street began the session on Thursday, August 15, with a slight rebound, but minutes later it was turned around. It extends the suffering one more day, after the heavy losses of almost 3% the day before.

China assures that the United States has broken the agreement between Xi Jinping and Donald Trump with a new tariff of 10%, equivalent to about 300,000 million dollars. China warns that it will have to take the necessary measures to counteract.

In addition, Trump has now reused his personal Twitter account to launch more messages. He says China must treat Hong Kong ‘humanely’ if it wants to get a trade deal.

European stocks decline in a volatile trading session

European equities traded slightly lower on Thursday, August 15, amid a volatile session. Bond markets fueled fears of an impending recession.

The pan-European Stoxx 600 fell slightly. The automobile sector led the losses, falling 1%, with most sectors and major exchanges in red. Utilities were the most prominent, with an increase of 0.9%.

Weak economic data from Germany and the euro zone sharpened fears within Europe, with the German economy contracting in the second quarter.

The reversal of US Treasury yields over 2 years and 10 years is panicking markets and driving all exchanges down.

The 2-year, 10-year UK curve is reversed for the first time in more than a decade. German and French bond yields also reached historic lows.

Yield curve reversals are traditionally seen as indicators of an impending recession.

___ContexGen_16ago

Rate curve reversal is a wake-up call for the economy

Alarms on the world’s stock exchanges. For the first time since 2007, the yield curve has been reversed between 2 and 10 year US Treasury bonds.

The most striking investment is the difference between 3-month and 10-year bonds.

There has been investment in the part of the curve most watched by investors, as this indicator has anticipated seven of the latest recessions in the United States.

The risks of a global recession over the next twelve months have increased significantly and both the US-China trade war and the chaotic Brexit process are the two main factors threatening global growth.

Saudi Arabia is drastically changing its oil exports to China

Saudi Arabia has increased its oil exports to China in recent months.

Saudi Arabia’s crude oil shipments to China have doubled in the course of a year. During the same period, Saudi Arabia’s oil exports to the United States have declined by almost two-thirds.
According to TankerTrackers, which tracks tankers and shipments based on satellite imagery and automatic ship identification systems, Saudi Arabia exported 1,802,788 barrels per day to China in July. In August last year it exported 921,811 barrels per day.

U.S. sanctions against Iranian oil have helped bring about change.

Major Asian energy importers, such as China, have been forced to leave the Islamic Republic and start buying more Saudi barrels to make up the shortfall.

WTO forecasts a contraction in global trade in the third quarter

The latest figures on export orders, air freight and other economic indicators suggest that the contraction in world trade will continue in the third quarter of 2019.

In a context marked by the trade war between the United States and China, now also extended to the financial sphere by the currency conflict between the two powers, the World Trade Organization published its Mecancías Trade Barometer. It put it at 95.7 points which is the worst figure since March 2010.

This index indicates an expected contraction in trade when it is below 100 points. It indicates expansion when it exceeds this mark.

Macri announces tax cut in Argentina after electoral defeat

Argentine President Mauricio Macri has announced a package of measures that will benefit millions of workers in an effort to alleviate the country’s economic situation.

It also aims to regain support after the defeat suffered in Sunday’s primaries.

The measures will reach 17 million workers and all SMEs.

Macri has assured that he deeply respects the Argentines who voted for other alternatives in the elections and has asked the population not to question the work that has already been done in these years, as there is too much at stake.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution0

August 19, 2019

Chinese stocks rise as treasury yields rise

Asian equities rose on Monday, August 19, as U.S. Treasury yields rallied after last week’s decline.

Mainland Chinese equities rose at the end of the session. The People’s Bank of China said it will improve the mechanism used to set the preferential lending rate starting this month. This will allow it to use ‘market-based’ reform methods to help reduce real interest rates on loans. Beijing is trying to shore up a slowing economy that has been hit by its trade war with Washington. Hong Kong’s Hang Seng index also rose by 1.87%.

U.S. stocks rose on Friday, August 16. The rally in bond yields eased fears of a recession that caused stocks to fall earlier in the week.

On Monday, safe-haven currencies such as the yen and Swiss franc came under pressure, as fears of a global economic slowdown were eased by stimulus measures. These hopes found support in the Chinese central bank’s interest rate reforms over the weekend, in the reduction of corporate borrowing costs and in reports of new fiscal stimulus in Germany. However, investor optimism is likely to be constrained by Huawei’s situation. This Company is a great test that will serve to detect the real mood of investors.

Against the Yen, the Dollar did not change significantly, reaching a week high of 106.98. The Japanese yen, which tends to be bought as a safe haven in times of economic uncertainty, fell slightly on Monday against most of the major currencies.

Oil prices rose sharply in Asia on Monday after Yemeni separatists attacked Saudi Arabia’s oil facilities and traders looked for signs that trade tensions between China and the U.S. could be eased. However, price gains were constrained by an unusually pessimistic OPEC report that stoked concerns about growing oil demand.

Gold prices fell on Monday due to the strength of the US dollar and the recovery of equities. Major central banks around the world are anticipating further stimulus measures, alleviating fears of a severe economic recession.

European markets are expected to open up Monday’s session.

___MarketEvolution10 Another busy week on Wall Street

The Dow climbs 300 points and finishes another busy week on Wall Street.

U.S. stocks rose on Friday, August 16. The rally in bond yields eased fears of a recession that caused stocks to fall earlier in the week.

The Dow Jones Industrial Average rose slightly, while the S&P 500 was up 1.4%. The Nasdaq Composite rose 1.7% with Apple and Nvidia leading the gains.

Bond yields rose again on Friday. The 30-year U.S. Treasury yield had fallen to an all-time low on Thursday, while the 10-year benchmark bond yield fell to a three-year low on Thursday as well.

Banking stocks rose, along with rising bond yields. Bank of America and Citigroup gained 3% and 3.5%, respectively.

European stocks close bullish ending highly volatile week

European markets closed on Friday 16 August with a sharp rise, as investors returned to risky assets after a turbulent week.

The Stoxx 600 pan-European index closed provisionally with a rise of almost 1.3%, with all sectors and major exchanges in positive territory.

A technical failure prevented the UK FTSE 100 from opening for nearly two hours on Friday morning. It was the longest break in the index in eight years.

The UK benchmark index had reached its lowest level of six months in the previous session, as the escalation of the US-China trade war and growing concern about the global economy led to global declines. On Friday, however, they were slightly higher.

Stocks of European banks and utilities led the gains, rising by about 2.4% and 1.7% respectively.

___ContexGen_19ago

Fed Bullard says only sustained rate curve reversal would be a bearish signal

The reversal of parts of the yield curve of Treasury bonds would have to be sustained over a period of time to be taken as a true bearish signal for a US economy that continues to grow.

With the slowdown of economies abroad, there is a flight to security, which is pushing interest rates down in the United States, even though economic growth in that country is reasonable.

With trade tensions and the slowdown in global growth baffling investors, it is not surprising that stock markets have fallen and key parts of the bond yield curve have been reversed.

Eurozone trade surplus falls in June

The eurozone’s trade surplus fell to 17.9 billion euros in June. It is lower than expected by the market consensus and is lower than the previous month’s 19.6 billion.

In the sixth month of the year, exports of goods from the euro zone to the rest of the world were 189.9 billion euros. They represent a decrease of 4.7% compared to June 2018. Meanwhile, imports were 169.3 billion, 4.1% less.

Trade within the euro zone fell to 160.5 billion in June, 6.6% less than in the same month last year.

Across the European Union, exports of goods reached 164.5 billion euros in June, 4.4% less than last year. Imports fell by 4.2% to 158.3 billion euros.

As a result, the EU recorded a surplus of €6.1 billion in goods trade with the rest of the world in June 2019, compared to €7 billion in June 2018.

Senators question Zuckerberg’s testimony

A new report reveals that Factbook used outside contractors to transcribe audio from its services without the explicit consent of users.

After Bloomberg’s report, Democratic Senator Gary Peters of Michigan sent a letter to Zuckerberg asking for more clarity about the program.

He also warns that, if the report is true, his answers during the April 2018 testimony could be incomplete.

At that hearing, he was specifically asked whether Facebook used audio obtained from mobile devices to enrich the personal information of its users. Zuckerberg’s answer was that he did not use it.

China warns it could forcefully ban Hong Kong demonstrations

Hong Kong prepares for more mass protests over the weekend, even as China warned it could use its power to quell the demonstrations.

The U.S. president urged his Chinese counterpart to meet with protesters to defuse tensions.

Hundreds of armed police officers conducted exercises at a Shenzhen sports stadium on the Hong Kong border on Thursday, a day after the U.S. State Department said it was deeply concerned about the movements.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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___MarketEvolution1

August 21, 2019

Asia declining as markets seek central bank guidance

Asian markets fell on Wednesday, August 21, after U.S. markets retreated for fear of recession. Some analysts say that investor concerns remain alive. Italian politics, the Brexit conflict and the U.S.-China conflict threaten to worsen and global policy-makers seem to have no plans to resolve these problems.

The Shanghai compound was slightly up. The Nikkei 225 dropped slightly. Car manufacturers were bearish, with Nissan shares losing 1.69%, Mazda Motor 3.48% and Toyota trading almost unchanged. Australia’s ASX 200 fell 1.05% while the financial sub-index fell 0.77%.

The dollar hit a three-week high as U.S. bond yields dropped again. Investors are now awaiting the central bank meeting, at which the Federal Reserve is expected to give clues about further interest rate cuts.

The euro fell after Italian Prime Minister Giuseppe Conte announced his resignation. Conte’s resignation will not have a strong impact on the euro in the long term, as it is just another chapter in Italy’s ever-changing policy.

The pound rose after Angela Merkel said that the European Union would think of practical solutions after Brexit with regard to the Irish border. The Australian dollar remained broadly stable.

U.S. equities fell on Tuesday, August 20, as investors would digest a strong rally after last week’s sharp decline. Investors are now focusing on the minutes of the last Federal Reserve meeting and are waiting for the central bankers meeting in Jackson Hole later this week. There will also be a Group of Seven summit this weekend, which will give clues as to what additional steps policymakers could take to boost economic growth.

On Wednesday, Brent oil prices surpassed $60 a barrel, for the first time in more than a week, amid data showing a greater than expected drop in U.S. crude oil inventories. Inventories fell 3.5 million barrels to 439.8 million barrels in the week of August 16, according to data from the American Petroleum Institute (API) industrial group on Tuesday. Analysts expected a decline of 1.9 million barrels. Nonetheless, concerns remain about a global economic downturn affecting oil demand.

In Wednesday’s Asian session, gold remained stable, after exceeding $1,500 an ounce in the previous session. Gold recovered on Tuesday from a drop of more than 1% the day before.

European markets are expected to open mixed on Wednesday.

___MarketEvolution8 The rally in bond yields continue

Dow falls for the first time in four days.

U.S. equities fell on Tuesday, August 20, as investors would digest a strong rally after last week’s sharp decline.

Stocks rose sharply on Monday as the rally in bond yields continued, alleviating fears of recession.

The Dow Jones Industrial Average traded 63 points lower. The S&P 500 and Nasdaq Composite fell 0.3% and 0.2%, respectively. The Dow came close to breaking a winning streak of three sessions.

Micron Technology and Advanced Micro Devices were down 0.6% and 2.1%, respectively. Netflix shares were down 2.9%.

Stocks in banks such as Citigroup, Bank of America and JP Morgan Chase traded lower as Treasury yields retreated. The 10-year benchmark yield fell by about 4 basis points to 1.55%.

European shares close down due to resignation of Italian prime minister

European equities closed down on Tuesday, August 20, while concerns about the growing political crisis in Italy are sharpening.

The pan-European Stoxx 600 closed at 0.7% down, with most sectors and major exchanges in negative territory.

Previously, stocks had gained ground, but the momentum soon gave way when Italian Prime Minister Giuseppe Conte announced his resignation. This comes after the leader of the League party, Matteo Salvini, disconnected his coalition with the Five Star Movement.

Conte spent a large part of his speech before the Senate on Tuesday beating Salvini for pressuring him to vote in favour of a motion of censure on the government.

Italy’s FTSE MIB fell 1%, reaching the day’s low as Conte spoke. Stocks of Italian banks Ubi Banca and Banco BPM fell more than 2%.

___ContexGen_21ago

Unfair competition

President Trump was not wrong to show serious irritation at the practices that China has been practicing with impunity, distorting world trade and exercising unfair competition.

He was also right to accuse the Asian giant of systematic obstacles to direct investment, as well as illegal appropriations of intellectual property.

Its firmness in demanding an even playing field is therefore fully justified.

Where he loses his reason is when it comes to implementing a strategy of pressure. He was confident that the threat of sanctions would suffice, without the capacity and will to resist of his adversary. Nor with its tactic of attrition, concluding principles of agreement that systematically fails to comply.

The Chinese leaders can stretch the rope at will, taking care not to exceed the limit of their rupture. But there is a growing risk that this permanent tug-of-war will lead to a loss of control that leads to an unstoppable spiral.

In the trade war everything indicates that we expect long months of upheavals

So far, the impact has only reached stock exchanges and bonds, the most sensitive assets, but will soon move to the real economy.

Does Donald Trump have a plan worthy of the name in his fight with China? Doubtful, judging by his erratic behaviour.

It’s not just a question of forms, which can clearly be improved in his case. What is really frightening is his blatant lack of strategy.

There is nothing edifying about the fact that the dignitary of the world’s leading power makes uncertainty his primary, almost sole, line of action.

It seems to be unaware that the main added value of any government lies in creating the conditions of trust and certainty that are essential for economic activity to develop properly.

The erratic behaviour of the American president is today the most worrying factor on the global scene.

More pressure on the European Central Bank

Inflation in the euro area hits record lows in almost three years.

Inflation in the euro zone slowed down and in July stood at 1% year-on-year, three tenths less than the previous month. This is its lowest level since November 2016. For the Union as a whole, the year-on-year rate was 1.4%, compared to 1.6% in June.

A year ago the level of inflation was higher. The euro zone inflation was at 2.2%, as was the EU, closer to the objective of the European Central Bank whose mission is to keep prices at levels close to 2%.

The lowest levels have been recorded in Portugal, Cyprus and Italy. In contrast, the most inflationary countries were Romania and Hungary.

The latest macroeconomic data show the weakness of the single currency region. And they put even more pressure on the ECB to boost activity.

Europe is preeminently on the list of disadvantaged in the current situation

The impact of instability and uncertainty is already being felt in an exporting country par excellence like Germany.

Collateral effects on others will soon be felt. On top of that, it would be illusory to think that the pulse with China will divert Trump’s attention from the dispute with Europe.

The ECB’s accommodating policy, Italy’s fragility and a hard Brexit combine to depreciate the euro.

We live in times of anxiety. Since the Smoot-Hawley Act of 1930 that generated and amplified the Great Depression, the world had not witnessed such a deliberate attempt to undermine growth and stability.

Aggravated by the fact that, on this occasion, protectionism is applied erratically and whimsically.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution2

August 22, 2019

Asian markets do not follow the trend of Europe and America

Japanese equities were traded unchanged on Thursday, August 22, after manufacturing activity in the country contracted for the fourth consecutive month in August. The Nikkei 225 remained flat.

Mainland Chinese markets were mostly traded lower. Hong Kong’s Hang Seng index fell by 0.87%. South Korea’s Kospi index fell slightly, while major chip manufacturers Samsung and SK Hynix lost 0.67% and 1.85% respectively. Australia’s ASX 200 rose slightly.

US equities rose on Wednesday, August 21, as quarterly results from retailers such as Target and Lowe’s boosted investor confidence.

The U.S. dollar rose after the minutes of the last Federal Reserve meeting were released. Expectations remain that the Central Bank will make further cuts in interest rates.

The International Monetary Fund said it was against governments trying to weaken their currencies through monetary easing or market intervention. The focus is on the yuan, after the U.S. Treasury declared China to be a currency manipulator in its escalation of the U.S. trade war.

The British pound traded lower, at 91.39 pence per euro. It is its second day of losses, as uncertainty over the divorce between Britain and the European Union weighs on the pound.

Crude oil was losing some ground, despite a drop in U.S. crude inventories. Concern about the world economic situation and the increase in inventories of refined products in the United States weigh on the price.

Gold remained above $1,500 an ounce as investors await the Fed Chairman’s speech in Jackson Hole looking for clues about future interest rate cuts. If Powell says he is going to cut rates aggressively, it might not be good for gold in the short term, as equities would rise.

European markets are expected to open up Thursday’s session.

___MarketEvolution7 Good quarterly results from retailers

Dow jumps over 200 points.

U.S. equities rose on Wednesday, August 21, as quarterly results from retailers such as Target and Lowe’s boosted investor confidence.

Major indices maintained their gains even after the bond market showed a sign of recession at the end of the session.

The Dow Jones Industrial Average closed 0.9% higher. The S&P 500 gained 0.8%. The Nasdaq Composite rose 0.9%.

Business results were better than expected, especially at a time when traders are worried about a possible slowdown in the U.S. economy.

Fears have lately led investors to move away from riskier assets such as equities in favour of traditionally safer assets such as gold and Treasury bills.

European shares close on the rise

On Wednesday, August 21, the European stock market closed higher as investors waited for the Fed and ECB minutes.

The pan-European Stoxx 600 closed above 1.1% with all sectors trading firmly in positive territory.

Renault and Fiat Chrysler shares gained ground after a report suggested that contact between the two firms’ executives has never ceased and that a merger is still at stake. Renault shares rose 3.7%, while the Fiat Chrysler rose 3.3%.

European investors are watching Italian markets after the resignation of Prime Minister Giuseppe Conte. President Sergio Mattarella and party leaders have started a round of contacts, hoping to find a solution to the political crisis.

___ContexGen_22ago

Europe forgets doubts about Italy and looks to central banks

European stock markets forget doubts about Italy and trade with strong rises on Wednesday, despite the uncertainty caused by the resignation of Italian Prime Minister Giuseppe Conte.

The market seems accustomed to Italy’s political crises, but the threats are mounting. Although there were no great expectations that the populist government would carry out the reforms that the Italian economy needs, the current political scenario could further slow down the country’s economic growth and even lead it into a new recession.

Investors are already looking forward to what happens with central banks. The minutes of the last meeting of the Federal Reserve and the European Central Bank will be released this week.

In addition, over the weekend the annual meeting of central bankers will be held in Jackson Hole, where Powell could give some hint on the Fed’s upcoming decisions.

Global recession alarms on the rise

Fears of global growth are justified, given the serious situation surrounding trade relations and numerous hot spots in the geopolitical arena. The outbreak of any of them would aggravate the situation.

The symptoms of deceleration have been installed for months in the large economies, but panic is beginning to spread in the markets before the possible technical recession in Germany, the deceleration of the Chinese economy, the possibility of a chaotic Brexit and the reversal of the yield curve in the United States.

There are also geopolitical tensions, such as the tense relationship between the United States and Iran or the rupture of nuclear commitments with Russia.

The lack of predictability of these risks, in an era in which the present is changing at the stroke of a ‘tweet’, increases volatility.

The question is ‘when and what room for manoeuvre do economies have to react’.

Trump considers lowering income tax for fear of recession

The U.S. president assures that he is considering the possibility of cutting taxes on wages in the United States, after alarms about a possible economic recession in the country are triggered.

Trump avoided accepting that there is a risk of recession and again accused the Federal Reserve of being to blame for the current situation. The U.S. president believes that the Fed is far behind in implementing aid policies.

In the United States, people pay taxes to fund Social Security and the Medicare health care program. Cutting those taxes could temporarily help the working class and boost the economy.

However, some experts have pointed out that these measures would increase the deficit and damage the country’s social security programs.

Lower interest rates normally stimulate markets

However, there is a problem with interest rate cuts, because they show that the economic situation is not good.

The Federal Reserve will probably follow the rest of the world’s central banks until it reaches interest rates close to zero.

A quarter-point drop in interest rates is a small adjustment, but simply the fact that the Federal Reserve is cutting interest rates raises fears of a recession.

The market is already analyzing the new situation, with $15 trillion in negative-yielding debt worldwide.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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___MarketEvolution3

August 23, 2019

Asian stock trading were mixed as tensions between Japan and South Korea intensify

Asia was expectant on Friday, August 23, at the speech by the U.S. Federal Reserve Chairman in Jackson Hole.

Mainland China’s shares were mostly bullish. Hong Kong’s Hang Seng index rose slightly, while Australia’s ASX 200 was also slightly bullish.

In Japan, the Nikkei 225 rose slightly and the Kospi, from South Korea, hesitated between gains and losses to end the decline. Tensions between Japan and South Korea intensified on Thursday after Seoul said it cancelled an intelligence exchange pact with Tokyo amid a bitter trade dispute. The agreement was aimed at exchanging information about the threat posed by North Korea.

The Dow Jones Industrial Average rose slightly on Thursday, August 22, as investors are watching the Fed Chairman’s speech. It is expected to provide some clues as to whether the Fed will cut interest rates for the second time this year to boost the U.S. economy.

On Friday, the dollar remained stable in Asia. The New Zealand dollar rose, after the head of the nation’s central bank said he was satisfied with the interest rate situation. That message reduces expectations of further immediate interest rate cuts, following the aggressive easing recently seen in New Zealand.

In recent months, currency markets have been driven by the shift of world central banks towards much more accommodative policies. New monetary policies come as demand slows and trade conflicts intensify.

Oil prices recovered Thursday’s losses, with Brent above $60 a barrel. Lower supply from major producers compensates for the slowdown in demand growth.

During Friday’s Asian session gold fell, but remained close to the key level of $1,500 an ounce. The decline comes amid trade uncertainties and before the Fed Chairman’s speech in Jackson Hole. China has partially lifted restrictions on gold imports, reopening the closed door since May.

European markets are expected to open mixed on Friday.

___MarketEvolution7 Jackson Hole’s expectation

Dow rises slightly to Jackson Hole’s expectation.

The Dow Jones Industrial Average rose slightly on Thursday, August 22, as investors are watching the Fed Chairman’s speech.

Jerome Powell will address the annual central bankers symposium in Jackson Hole on Friday. Investors will look for clues to confirm whether the Fed will cut interest rates again.

The speech also comes amid rising recession fears. These fears affected stocks in August. The Dow and Nasdaq fell more than 2% this month, while the S&P 500 lost 1.9%.

European equities close down amid fears of recession

European equities closed down on Thursday, August 22, as fears of recession rose after Mario Draghi’s speech.

The Stoxx 600 pan-European index closed provisionally with a slight decline. Most sectors and major exchanges leaned towards negative territory.

European markets began the session in red, after the 2-year and 10-year US yield curve was reversed for the second time in two weeks.

The minutes published on Thursday of the 25 July ECB meeting showed monetary policy makers suggesting the need for a combination of measures to shore up the eurozone economy. In addition, recent indicators show a gloomy outlook.

The President of the European Central Bank, Mario Draghi, has hinted that new measures can be implemented as early as September, in the face of steadily declining growth and inflation and a weakening of economic data.

___ContexGen_23ago

There shouldn’t be a recession because markets aren’t ready

If there’s a recession, it’ll cost a lot to get out of it.

Donald Trump’s government, like other countries, has a very high debt.

In the United States it is almost 23 trillion dollars. With that burden, it may not be able to carry out the bailouts and stimulus packages that might be needed to fight a significant downturn in the economy.

The only thing the world cannot afford right now is for the United States to stop its growth cycle, given that the United States is the engine of global growth.

Unfortunately, recessions are never convenient.

However, some analysts assert that there is no danger of recession at the moment. Consumers are strong enough to keep the U.S. economy strong amid the current trade war and global economic slowdown.

China may have a new way of boosting the economy through its central bank

Growth in China is slowing, as its trade war with the United States appears to intensify.

China’s central bank has changed the way commercial lenders fix interest rates. It is a measure that is expected to reduce the cost of borrowing at a time when the Chinese economy needs a boost.

Chinese authorities have used both monetary and fiscal measures to boost economic activity, but analysts say certain segments of the economy may need more help.

Rising tariffs will put downward pressure on corporate margins and profitability

Higher import tariffs have made it necessary to pass on their cost to final prices. Companies could now move on to the next stage where contracting would be reduced.

President Trump appears to be on both sides of the recession discourse. On the one hand, he argues that the economy is strong. On the other hand, he talks about measures the White House could take to boost a troubled economy, such as a payroll tax cut.

Trump has expressed admiration for Germany’s sale of bonds that promise negative yields. He doesn’t mention, however, that the Germans didn’t even sell half of the bonds they auctioned or that many observers see negative interest rates as a warning sign.

On the other hand, Trump continues to pressure the Fed to cut interest rates as soon as possible.

The Federal Reserve minutes, released Wednesday, revealed the existence of a divided central bank, which is not content with its latest interest rate cut as part of the ongoing easing cycle.

The Fed also admits that tariffs and trade warfare, combined with slowing economic conditions, are likely to have significant negative effects on the U.S. economy.

A new world order in markets and how to operate it

August has been a wild month on Wall Street. The escalation of the trade war and the reversal of the yield curve have provoked weeks of volatility that have caused the S&P 500 to be 7% below its historic high.

Recent years have been periods of high yields and relatively low volatility. However, with the reversal of the yield curve and the slowdown in the economy, we are entering a new cycle where there will also be greater volatility.

Markets will tend to take refuge in safe assets for fear that the economy will begin to contract.

When all this is put together, we have a slowing economy. There is a limited amount of stimulus that can be applied and, each time it is increased, the aid measures are less effective.

To protect yourself from a possible recession in the next two years, it would be wise to cling to stocks that pay dividends. This type of stock is one of the most attractive asset classes today, earning with increases and offsetting losses.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution4

August 26, 2019

Asia’s shares fall as U.S.-China trade war intensifies

Shares in Asia fell on Monday, August 26, after an escalation in the U.S.-China trade war late last week.

Hong Kong’s Hang Seng index led losses in the region by dropping 2.79% after another weekend of violent protests in the city. Mainland Chinese equities were also bearish. The Nikkei 225 in Japan fell 1.99%. Losses were also seen in South Korea, where the Kospi fell 1.28%. Australia’s S&P/ASX 200 lost 1.32%.

U.S. equities fell on Friday, August 23, after Donald Trump ordered U.S. manufacturers to find alternatives to their Chinese operations. Apple led the downturns.

Trump said it could declare a national emergency. According to the U.S. Administration, intellectual property is being stolen for values between $300 billion and $500 billion a year and a trade deficit of nearly $1 trillion a year is occurring.

At the G7 meeting in France over the weekend, Trump caused some confusion by saying he might have had doubts about tariffs. On Sunday, the White House clarified these comments by saying that Trump wished tariffs on Chinese products had been raised even further.

The Chinese yuan hit 11-year onshore lows and hit record lows in offshore trade after a sharp escalation in the U.S.-China trade war. This affects investor confidence and obscures global economic prospects.

The Japanese yen, often bought as a refuge in times of uncertainty, managed to advance against the rest of the currencies, in a sign of decreased risk appetite.

On Monday, oil fell to a two-week low as the intensification of the China-U.S. trade war destroyed confidence in the global economy.

On Monday in Asia, gold reached a six-year high as equity markets fell. Investors are rushing to take refuge in safe assets. Hedge funds and money managers increased their bullish position in COMEX gold and raised net long positions in silver contracts in the week to August 20.

European markets are expected to open Monday’s trading session down.

___MarketEvolution10 Trade war intensifies

Dow plummets more than 600 points after Trump orders American manufacturers to leave China.

U.S. stocks fell on Friday, August 23, after Donald Trump ordered U.S. manufacturers to find alternatives to their operations in China. Apple led the downturns.

The major indices also recorded weekly losses for the fourth consecutive time. The Dow fell 1% during the week, while the S&P 500 fell 1.4% and the Nasdaq lost 1.8%.

These moves come as the U.S.-China trade war intensifies, while the bond market shows a sign of recession.

Earlier in the day, stocks moved around the flat line after the chairman of the Federal Reserve delivered a speech at the annual symposium in Jackson Hole.

European equities close down as trade tensions increase

The Stoxx 600 pan-European index closed lower on Friday 23 August, with most sectors in negative territory. Automotive stocks suffered heavy losses, dropping around 2%.

Brexit is still on the operators’ radar after Boris Johnson met Angela Merkel and Emmanuel Macron to convince them about new negotiations.

Italian President Sergio Mattarella said several parties have indicated that they need more time to find a solution to the current government crisis. Luigi di Maio, leader of the Five Star Movement, said his party is working to avoid early elections.

The Financial Times reported that the EU is considering creating a 100 billion euro sovereign fund to finance Europe’s big industries and to compete with US corporate giants such as Apple and Google.

___ContexGen_26ago

Powell softens its message by saying that the Fed’s challenge is to maintain expansion

The much-anticipated speech by the chairman of the Federal Reserve at the Jackson Hole central bankers’ meeting has already arrived and has been milder than expected.

He said the central bank will act accordingly to sustain the expansion.

In his speech, he explained that the U.S. economy continues to perform well, although it faces challenges. He highlighted solid employment growth and a rise in wages that has led to robust retail consumption.

However, he said business and manufacturing investment has weakened.

He added that global growth prospects have deteriorated since the middle of last year and, therefore, the Fed should focus on how trade events affect the economy and adjust its monetary policy to the new situation.

The European Union reiterates its position on Brexit

The European Union is firm and united against Brexit.

Despite rumours in the British press that Boris Johnson could negotiate with the leaders of France and Germany, a spokeswoman for the European Commission has stated that the bloc remains unified on the Brexit issue and that Johnson should admit that there is no time for further negotiations.

Europe is ready to work constructively with the UK on any concrete proposal that is compatible with the previously agreed Withdrawal Agreement.

On Wednesday, Angela Merkel gave the British prime minister 30 days to prepare her proposal on Brexit, avoiding a hard divorce.

The most delicate point continues to be the border with Ireland which, according to Boris Johnson, is the main obstacle to not accepting the terms of the agreement reached by his predecessor, Theresa May.

Merkel took the opportunity to reiterate that the objectives of the European Union are to protect the single market, maintain good relations with the United Kingdom after the exit and ensure that the peace agreements in Northern Ireland are complied with.

The French president, for his part, wants all the responsibility to fall on the British and said that everything depends on Johnson. He also warned that, although the European bloc is not in favour of the hard Brexit, they are already prepared for this alternative.

China fuels trade war with new tariffs

The Asian giant has announced $75 billion in tariffs on products imported from the United States, including oil.

The new tariffs will range from 5% to 25%. Some will be effective from 1 September and others from 15 December. These new tariffs are Beijing’s response to U.S. taxes at the beginning of August.

Oil will be one of the most imminently affected products and will be subject to 10% tariffs from September 1.

China will also impose a 25% tariff on US cars from 15 December.

The Asian giant pointed out that the additional tariffs, announced by Washington at the beginning of August, are a serious violation of the consensus reached between the leaders of the two countries, Xi Jinping and Donald Trump.

ECB ignores Jackson Hole

For the second consecutive year there will be no presentations by members of the Executive Committee of the European Central Bank at the mythical Jackson Hole Monetary Policy Forum, organized by the Federal Reserve of Kansas.

Frank Smets, the ECB’s Director General for Economic Affairs, will be the only European representative on the forum. Executive Board members Philip Lane, Benoît Coeure and Sabine Lautenschläger will attend but not participate.

In 2018 there was no ECB representation at the event.

The presence of members of the European Monetary Authority in Jackson Hole has always been scarce, but at least the leaders of the Entity attended.

The year 2016 was the last time Mario Draghi was present, on the occasion of the farewell of Janet Yellen as president of the Fed. The Italian banker has attended the American forum twice, out of the eight opportunities he has had.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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___MarketEvolution5

August 27, 2019

Asian stocks rise as investors watch U.S.-China trade evolution

Shares in Asia traded higher on Tuesday, August 27, as investors watched closely as the U.S.-China trade war unfolded after another attempt at rapprochement.

Mainland Chinese equities rose at the end of the session, leading earnings in the region. Hong Kong’s Hang Seng index fell slightly. The Japanese Nikkei 225 gained 1.17%, while Softbank Group stocks rose 2.42%. South Korean Kospi rose by 0.65 %, as chipmaker SK Hynix saw its value rise by 1.81 %. Australia’s S&P/ASX 200 rose slightly.

American shares rose on Monday, August 26, after President Donald Trump said China is ready to return to the negotiating table after a supposed phone call on Sunday. Trump said he believed China was sincere in its desire to reach an agreement, while Chinese Deputy Prime Minister Liu He said China was willing to resolve the dispute through calm negotiations.

The Japanese yen advanced as investors were optimistic about the possibility of an early resolution of the U.S.-China trade war. Risk appetite is now increasing. Against the Japanese yen, the dollar came under pressure as U.S. Treasury yields showed that investors are interested in the safety of public debt.

The currency market was also relieved by the daily yuan fixation by the People’s Bank of China, which many traders saw as an attempt to halt the yuan’s decline against the dollar. The offshore yuan opened at 7.1445 per dollar.

The British pound traded higher after Monday’s fall, when investors re-evaluated whether British Prime Minister Boris Johnson had made any progress in convincing the European Union to renegotiate the Brexit agreement. Johnson said on Monday that he was willing to take the Brexit talks to the last minute before the October 31 deadline.

Oil prices rose during Tuesday’s Asian session after the U.S. president announced a possible trade deal with China. Oil prices have fallen by about 20 percent from the peak reached in April 2019, partly because of concerns that the U.S.-China trade dispute is affecting the global economy, which could erode oil demand.

Gold remained stable after reaching a six-year high. On Monday, gold prices reached their highest level in more than six years, surpassing the $1,550 mark, after Washington and Beijing indicated a possible thaw in their trade dispute.

European markets are expected to open up Tuesday’s session.

___MarketEvolution8 Trump says U.S. and China resume negotiations

Dow rises more than 200 points after Trump says U.S. and China resume negotiations
American shares rose on Monday, August 26, after President Donald Trump said China is ready to return to the negotiating table after a supposed phone call on Sunday.

There is some optimism that the U.S. and China could restart talks, but at the same time some doubts remain. Trump said this is a very positive development for the world.

Global Times editor Hu Xijin said the negotiators from both countries did not speak on the phone and added that ‘the two sides have been in contact at a technical level’ and that China does not change its position and will not give in to pressure from the United States.

European shares close unchanged

European shares closed unchanged on Monday, August 26, after the U.S. president said China had called on U.S. trade negotiators to resume talks.

The Stoxx 600 pan-European index was just above the flat line in the closing bell, with car stocks exposed to China leading the gains, up 1%. Healthcare stocks were the worst performers, declining 0.4%.

UK markets were closed for a holiday.

Another important point of discussion in the G-7 was France’s plans to impose on technology giants the ‘GAFA rate’ (Google, Apple, Facebook and Amazon) of 3% of turnover generated in their territory, which seems to be also adopted by the other OECD countries.

___ContexGen_27ago

European currency falls victim to new type warfare

The euro is the major victim of the new rate war that seems to have broken out between the central banks. The EU currency hit its three-week low against the dollar on Friday.

Its strength is about to come to an end, as the dollar advances by leaps and bounds, supported by the Federal Reserve.

Pessimism about Germany, whose macro data already points in the direction of recession, is weighing on the European currency, which is affecting sentiment about the measures that central banks will take.

It is now more strongly discounted that the European Central Bank will take more accommodative measures than its counterpart on the other side of the Atlantic.

Current situation has gave wings to the Dollar

Analysts still expect the Federal Reserve to cut rates, but they believe it will do so much more slowly than the European Central Bank, precisely because of discrepancies within the FOMC, where more than one of its members is in favour of taking things easy.

Those who ask to wait see no reason for the Fed to start relaxing its monetary policy and defend their position based on low unemployment, rising wages, strong private consumption and the fact that inflation is not far from the 2% target.

France and the United States seem close to an agreement on the digital rate

France and the United States are closer to closing an agreement on the tax that the Paris government has imposed on large technology companies.

France’s approval of the so-called ‘GAFA tax’ (Google, Apple, Facebook and Amazon) caused Trump to threaten to impose tariffs on French wine imports. This in turn was followed by warnings of trade retaliation from the European Union.

French sources explained that the compromise reached between the holders of Finance of France, Bruno Le Maire, and the United States, Steven Mnuchin, is that France will return to the companies to which that tax is already applied the difference between what is charged and what is set by the new international tax system in which the OECD works.

The G7 finance ministers reached a principle of agreement on this matter last July, which instructs the Organization for Economic Cooperation and Development to have its proposal ready in January.

Merkel recalled that the OECD countries intend to find a joint solution by 2020.

This new international tax system seeks to ensure that large technology companies, generally from the United States, pay more taxes in the countries where they generate their business and not only where their headquarters are located.

It must be remembered that they tend to be established in tax havens.

German business confidence drops to 2012 lows

It seems that the worsening of the trade crisis is leaving its mark on the German economy.
The Ifo indicator of business confidence in Germany has fallen in August to its lowest level since November 2012. It is another symptom of recession in the largest economy in the euro zone.

The Ifo business confidence index stood at 94.3 in August, up from 95.8 in July. This is a bigger drop than analysts expected.

In addition, German GDP contracted by 0.1% in the second quarter and the Bundesbank assures that it will probably go into recession in the third quarter.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution0

August 28, 2019

Asian Stocks look for direction as investors watch U.S. treasury yields

On Wednesday, August 28, Asian equities were traded in a mixed manner, following a reversal of the yield curve closely watched by investors.

Mainland Chinese equities fell at the end of the session. Hong Kong’s Hang Seng index was slightly higher. The Nikkei 225 in Japan traded slightly higher. South Korean Kospi rose 0.61%. Japan and South Korea are caught in a diplomatic dispute as Japan has officially withdrawn South Korea from a list of preferential trading partners. In Australia, the S&P/ASX 200 traded slightly higher.

U.S. stocks fell on Tuesday, August 27, erasing the solid gains of the day’s early days. The bond market worsened as fears about the trade war increase.

On Wednesday, the dollar came back under pressure as fears remain that the trade war will continue and that economic growth will be seriously affected. U.S. bonds fell again.

Counterparties, especially the yen as a safe haven currency, received an additional boost as falls in long-term Treasury yields deepened the yield curve reversal. It should be remembered that this phenomenon has anticipated several recessions in the past.

The British pound recovered on Tuesday, after British opposition Labour leader Jeremy Corbyn said he would do everything necessary to prevent Britain from leaving the European Union without a divorce settlement.

The Australian dollar has fallen to a low in early August, affected by factors such as the Bank of Australia’s monetary easing bias and the gloomy economic outlook for China, Australia’s largest trading partner.

Crude oil rose 1% Wednesday in Asia after U.S. inventories fell more than expected. U.S. crude oil reserves fell sharply by 11.1 million barrels last week, according to the API, due to falling imports.

Gold fell on Wednesday, after rising more than 1% in the previous session, but remained close to a six-year high in the hope of an interest rate cut by the Fed and uncertainty surrounding the China-U.S. trade talks.

European markets are expected to open mixed on Wednesday.

___MarketEvolution8 Investor sentiment was weakened

The Dow erases the 155-point gain while Wall Street monitors the trade war.

U.S. equities fell on Tuesday, August 27, wiping out solid gains early in the day. The bond market worsened, as fears about the trade war increase.

The spread between the 10-year Treasury yield and the 2-year rate fell to 5 basis points negative, its lowest level since 2007. That turn is causing experts to fear a recession. The interest rate on 3-month Treasury bonds was also traded above the yield on 30-year bonds.

Banking stocks fell across the board. Bank of America traded 1.8% lower, while Citigroup fell 2.5% and JP Morgan Chase fell 1.9%.

Investor sentiment was weakened after Hu Xinjin, editor-in-chief of the Global Times in China, said it is increasingly difficult for the US to pressure China to make concessions as China’s economy is increasingly driven by domestic growth.

European shares close mostly upwards as China considers easing car restrictions

European equities changed course on Tuesday, August 27, to close up after China’s Council of State announced that it is considering easing and removing restrictions on car purchases as part of a broad movement to boost consumption.

The pan-European Stoxx 600 finished slightly higher, with car equities receiving a boost from the Chinese announcement. Almost all sectors closed in positive territory. China also said it will encourage credit support for the purchase of new electric vehicles and smart appliances.

Italian policy has again been the focus of attention. The Five Star Movement and the Democratic Party have come together again to form a new coalition government.

In the end, the two sides clashed over possible functions in the government cabinet, which led the M5S to suspend negotiations until the PD promised to return outgoing Prime Minister Giuseppe Conte to government leadership.

Meanwhile, the PD accused M5S of obstructing negotiations by demanding the role of interior minister for its leader Luigi Di Maio.

German GDP data showed that Europe’s largest economy contracted, due to weak exports in the second quarter. Trade disputes and declining external demand continue to weigh.

Violence in Hong Kong becomes more serious but the government has control according to Lam

The violence of anti-government protests in Hong Kong is becoming more serious, but the government is confident it can handle the crisis, according to the leader of the former British colony.

Carrie Lam was speaking in public for the first time since the demonstrations intensified on Sunday, when police fired water cannons and tear gas bursts in battles with protesters who threw bricks and gasoline bombs.

The city, ruled by the Chinese, is grappling with its biggest political crisis since it was handed over to Beijing in 1997 and Communist Party authorities have sent a clear warning that forceful intervention is possible to quell the violence.

The Hong Kong leader, supported by Beijing, said she would not give up building a platform for dialogue, although it was not the right time to establish an independent investigation into the crisis, one of the fundamental demands of the demonstrators.

We must prepare for reconciliation in society by establishing new channels of communication.

Costco opens in China

U.S. shopping giant Costco received an unexpectedly frenetic welcome from enthusiastic Chinese shoppers.

Costco opened its first consumer club in China on 27 August in a suburb of Shanghai. Just a few hours after the opening it had to close, due to being overwhelmed by customers.

Local media reported that local residents crowded into the store, with cars queuing to get in from half a kilometre away. Apparently, the cars had to wait three hours to get a parking space.

A video clip that was posted on YouTube by the user “China on Weixin” showed that there was hardly any room for shopping carts to move around the premises.

Labour say they will do everything in their power to stop a Brexit without an agreement

Labour leader Jeremy Corbyn has assured his party that he will do everything possible to avoid a Brexit without agreement.

The left-wing politician lamented that British Prime Minister Boris Johnson praises the US president and warned that an abrupt exit from the European Union will be tantamount to forging an agreement with President Trump.

That agreement will probably leave Britain at the mercy of the United States.

The politician plans to meet in Parliament’s chambers with other leaders of British political parties to raise and explore proposals to abort the possibility of a brisk march.

Corbyn has said that the country now needs an injection of democracy which, he says, could come in the form of a referendum or general elections.

Fall in exports leaves Germany on the brink of recession

The sharp fall in exports in the second quarter, in a context marked by the trade war, was the main cause of the contraction of 0.1% of Germany’s GDP.

This contraction leaves the ‘European locomotive’ on the verge of technical recession.

The development of foreign trade slowed economic growth in the second quarter of 2019. Exports recorded a quarterly fall of 1.3%, much greater than the 0.3% drop in imports.

Thus, the German trade balance recorded in the second quarter of the year a negative contribution of 0.5% to the economic performance of the largest economy of the Old Continent.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution1

August 29, 2019

Asian stocks fall as investors watch U.S. treasury yields

Asian equities fell on Thursday, August 29, as investors continue to watch the U.S. Treasury yield curve, which reversed even more overnight.

Mainland Chinese equities declined at the end of the session. Hong Kong’s Hang Seng index fell slightly. The Nikkei 225 in Japan traded lower. In South Korea, the Kospi dropped slightly.

U.S. equities rose on Wednesday, August 28, as the energy sector recovered.

On Thursday, risk appetite boosted the yen’s safe-haven status. The yen also rose against the Australian and New Zealand dollars, which hit four-year lows as business sentiment weakened.

Against a basket of currencies, the Dollar remained stable. China’s spot yuan weakened slightly for the eleventh consecutive session, although the price set by the Chinese central bank helped to stop the decline.

The pound remained flat. It is already anticipated that Brexit will end up without an agreement after British Prime Minister Boris Johnson’s decision to suspend Parliament in an attempt to limit the debate before the October 31 deadline.

During Thursday’s Asian session, oil prices fell for the first time in three days after their previous rises. The market now seems to be unaffected by the sharp drop in US inventories, which fell 10 million barrels last week, much more than analysts expected.

During Thursday’s Asian trading, gold advanced on fears of a global economic downturn. Investors are closely following the development of trade negotiations between China and the U.S., and the position of central banks around the world.

European markets are expected to open Thursday’s trading session lower.

___MarketEvolution7 The energy sector recovers

Dow rises more than 250 points with energy stocks receiving oil boost.

U.S. equities rose on Wednesday, August 28, as the energy sector recovered.

However, investor sentiment was dampened as a key part of the U.S. yield curve was further reversed. This raises fears of an impending recession.

The S&P 500 energy sector rose 1.4%, led by a 10.6% increase in Cimarex Energy. U.S. oil prices rose more than 1%. Oil rises after crude oil inventories plummeted by 10 million barrels last week.

European stocks close down and Pound falls on fear of Brexit

The European stock market ended Wednesday’s August 28 session in negative territory after the US yield curve reversal deepened to levels not seen since 2007, generating fears of an impending recession.

The pan-European Stoxx 600 was slightly bearish, while insurance stocks fell 1.2% and the oil and gas sector recorded gains as a result of higher crude oil prices.

The pound fell against the dollar after the Queen approved British Prime Minister Boris Johnson’s plan to temporarily suspend Parliament. The controversial measure will restrict parliamentary time before the Brexit deadline and increase the UK’s chances of leaving the European Union without reaching an agreement.

German consumer sentiment data, released Wednesday, showed that consumer morale remained unexpectedly stable for September, despite the country’s deteriorating economic growth prospects.

___ContexGen_29ago

Dudley encourages Federal Reserve to help influence 2020 elections

Former New York SFR President Bill Dudley asks the central bank not to help President Donald Trump wage his trade war with China.

He even suggested that the Federal Reserve try to influence the 2020 election against Trump by no longer cutting interest rates.

In a very clear comment to his former colleagues, Dudley urged Federal Reserve officials not to lower interest rates as long as the president continues his tariff battle with the Chinese.

According to Dudley, Trump’s re-election poses a threat to the U.S. and global economy, to the Federal Reserve’s independence, and to its ability to meet its employment and inflation targets.

In Italy the Democratic Party concedes to the Five Stars and withdraws its veto against Conte

The anti-system Five Star Movement imposed itself on the center-left Democratic Party in negotiations against the clock to form a government in Italy.

He got the Social Democrats to withdraw their veto from a cabinet led by the current prime minister, Giuseppe Conte.

The PD and M5S have held several meetings in recent days to try to iron out rough edges and design a joint political project that avoids elections in the autumn.

The PD has been reiterating in the last few days that if it allies with the Five Stars it has to be in a government markedly different from the one that the anti-systems and ultra-right League have had since June 1, 2018.

Shortly afterwards, the PD spokesman in the Chamber of Deputies, Graziano Delrio, declared to the media that the formation would not impose vetoes against Conte and that talks were resumed.

German consumer confidence challenges economic slowdown

German consumer confidence remains stable for the month of September, despite the intensification of the trade war and worsening economic expectations in Germany.

The global economic slowdown, trade wars and Brexit discussions are putting increasing pressure on the economic outlook.

For the time being, however, the propensity to consume has remained strong, even increasing in August, despite the fall in poor revenue expectations.

After growth in previous months, consumer income expectations declined in August, when the corresponding indicator stood at 50.1 points, compared to 50.8 in the previous month.

Consumer expectations fell sharply by 8.3 points in August, their worst reading since January 2013.

Never use a debit card

As warned by fraud expert and ex-con artist Benito Aguilar.

Every year, millions of U.S. consumers (nearly 7% of the population) are victims of scams and fraud.

In 2017, the number of victims of fraud in the United States reached 16.7 million, with 16.8 billion dollars lost.

‘For more than 45 years, I have advised the FBI and hundreds of financial institutions, corporations and government agencies around the world to help them in their fight against fraud.’

‘Don’t use a debit card’. ‘If you want to prevent identity theft, never, ever use a debit card.’

A debit card is undoubtedly the worst financial tool ever given to the American consumer. Every time it is used, the real money and the bank account are put at risk.

Instead, use a credit card, even when traveling abroad. With credit cards, federal law limits the user’s liability if there is unauthorized use of the card.

When you use a credit card, you spend the money from the Credit Card Company, until you pay the bill at the end of the month. In the meantime, the user’s money is earning interest on their bank account.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution2

August 30, 2019

Asian equities recover amid positive signals from Beijing

Asia’s shares were up on Friday, August 30, following Beijing’s insinuations that it will not retaliate against Washington’s latest round of tariffs for now.

Mainland China’s shares advanced in the first phase of the session. Hong Kong’s Hang Seng index rose 0.69%. In Japan, the Nikkei 225 rose 1.35%, while the shares of robot manufacturer Fanuc rose 3.28%. Australia’s S&P/ASX 200 traded 1.37% higher.

Similar gains were seen in South Korea, where Kospi jumped 1.9%, while chip maker SK Hynix saw its shares soar 6.41%. The Bank of Korea did not change its interest rate on Friday. This decision is in line with analysts’ expectations. The central bank had cut its interest rate for the first time in three years in July.

U.S. equities rose on Thursday, August 29, after China said it wanted to settle its long-standing trade dispute with a calmer attitude.

The Australian dollar fell to a 10-year low, while the yen remained at a low during Friday’s Asian session in hopes that China and the United States can get their negotiations back on track. The New Zealand dollar fell 0.30% to a four-year low.

On the other hand, the U.S. currency was favoured by month-end closings, which brought the dollar to its highest level in a month.

The Yen remained stable against the Dollar. Risky assets were supported Thursday after China’s Commerce Ministry said Beijing and Washington were discussing the next round of talks, although the effect of the statement was brief. There are now many geopolitical risk factors: trade conflict between the United States and China, the Brexit, the situation in Hong Kong and the Middle East. All these factors should cause the yen to rise again.

The euro fell to a four-week low. It is affected by the slowdown in the eurozone economy and the possible monetary easing of the European Central Bank from next month. Christine Lagarde, the next ECB president, said the central bank still has room to cut interest rates if necessary, although this could pose a risk to financial stability.

Oil took a break on Friday after three days of sharp rises. It has been driven by a drop in U.S. inventories and a new hurricane in Florida. Concern about the slowdown in economic growth, due to the trade war, and the flow of oil demand kept the price hike under control.

Gold is down, as the United States and China indicated they could resume talks to resolve their protracted trade dispute. This puts the precious metal on the path to a small weekly loss, even though August has been a very bullish month for gold. Bullion was up 7.9% this month, after four weeks of gains.

European markets are expected to open up Friday’s session.

___MarketEvolution7 No more trade tensions?

Dow rises 350 points after China insinuates it will not retaliate for now.

American shares rose on Thursday, August 29, after China said it wished to resolve its long-standing trade dispute with a calmer attitude.

China’s trade ministry said Thursday it opposed escalating trade tensions, insinuating that Chinese authorities will not retaliate against the latest round of U.S. tariffs.

In the business world, Boeing and Caterpillar rose by at least 0.8% each, while Deere rose by 2.5% and Micron Technology gained 3.7%.

The bond market has shown a sign of recession this month. The spread between the 10-year Treasury yield and the 2-year interest rate is trading at its lowest level since 2007.

There is a reversal of the yield curve that investors fear because it has historically preceded recessionary situations.

Europe’s shares rise lively because China wants a quieter deal

On Thursday, August 29, European markets closed strongly, while investors followed closely the evolution of the U.S.-China trade war and digested comments from central bankers.

European equities cut their earnings slightly at the end of the session, after European Central Bank monetary policy chief Klass Knot said he saw no reason to resume quantitative easing in the region.

Inflation data had reinforced expectations that the ECB would inject stimulus into the economy next month, providing an additional boost to markets.

All sectors and major exchanges performed in positive territory.

___ContexGen_30ago

Corbyn will seek an urgent debate next week to avoid the hard Brexit

The Labour Party reacts, after the last movement of Boris Johnson which has led to the closure of the British Parliament until two weeks before the date of the Brexit.

Labour leader Jeremy Corbyn will try to have an urgent debate in Westminster next week, on the days when there will be sessions, before the suspension backed by Queen Elizabeth II.

The idea of the Labour Party is to submit a petition for a debate to be convened in the September working week.

Parliament is now on holiday and will return from the summer recess on 3 September. However, the 9th will close again and will remain so until 14 October.

On Monday there will be what is known as a motion from Section 24 of the Permanent Order to try to have an emergency debate.

The possibility of passing legislation blocking the hard Brexit is one of the options that has the opposition to try to curb the pretensions of the British Prime Minister.

Johnson has plunged the United Kingdom into an unusual situation that has fallen like a jug of cold water in the United Kingdom.

China sent new troops to Hong Kong

China sends new troops to Hong Kong with a promise to protect national sovereignty.

China sent a new batch of troops to Hong Kong on Thursday and its military issued a statement saying that its Hong Kong garrison will resolutely follow the instructions of the central government.

It came as the Asian financial center continues to struggle with protests that sometimes turned violent.

Hundreds of thousands of people have taken to the streets of Hong Kong since the beginning of June to protest against a bill that has been suspended.

Eurozone confidence rebounds in August despite economic slowdown

Economic confidence in the euro area increased by four tenths in August.

In July the indicator recorded its lowest level since March 2016 due to the slowdown in the growth of the euro block.

Economic confidence in the EU as a whole has also fallen, recording its worst reading since December 2013.

The slight improvement in economic confidence in the eurozone was due to a sharp increase in the industrial sector and retail trade. However, it has deteriorated significantly in the services sector, in construction and among consumers.

China bets on dialogue with the United States and will not retaliate any more

The Chinese Government has expressed its opposition to an escalation of the trade war with the United States and its willingness to resolve the differences between the two countries through dialogue.

Beijing’s response to the latest tariffs announced by Washington is sufficient, which removes the fear of new Chinese reprisals after the hardening of the protectionist measures that the United States will implement from September 1st.

China has indicated that it is resolutely opposed to the escalation of the trade war and is willing to resolve the problem through consultation and cooperation.

An escalation of the trade war is not good for China, for the United States, or for global interests. It can even have disastrous consequences for the world.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

___MarketEvolution3

September 2, 2019

Asia’s shares appear weak as new tariffs enter into force

On Monday, September 2, the Asian stock market was affected by the latest round of tariff measures. Investors are also digesting better than expected Chinese manufacturing data.

Mainland Chinese equities rose. China’s State Council announced more measures to support its economy. In the communiqué it said that it attached great importance to the development of sectors such as infrastructure, high technology and the transformation of traditional industries. In Hong Kong the Hang Seng index fell by 0.47%. Tensions increased in the city, with another round of new protests over the weekend.

The Nikkei 225 in Japan fell slightly. In South Korea, the Kospi rose slightly. Australia’s S&P/ASX 200 traded 0.46% lower.

On Friday, August 30, U.S. equities had little change, as investors took a breather after a month of high volatility. Traders are now cautious about the start of September.

Investors are moving away from risk, which could be an important factor in the currency market fluctuations that will be seen in the coming weeks.

Initially the yuan fell, but its losses were reduced after the announcement of the Chinese manufacturing industry, which exceeded market expectations.

The Yen strengthened on Monday, thanks to a greater appetite for safe assets in the face of worries about the global economic outlook. The euro moved largely unchanged during the Asian session, but sentiment for the common currency is weak after it fell to its lowest level in more than two years on Friday.

Oil prices fell during Monday’s Asian session after new tariffs imposed by the U.S. and China came into effect. This raises concerns about a new blow to global growth and demand for crude oil. Trade and tariff surpluses are unavoidable for oil markets and it will be difficult for oil to ignore concerns about the threat of poor global demand.

Washington began imposing 15% tariffs on Sunday on a variety of Chinese products, including footwear, smart watches and flat-screen televisions, while Beijing began imposing new tariffs on U.S. crude oil.

Gold price rose on Monday, as demand for safe-haven stocks rose after the U.S. and China introduced new tariffs. It is intensifying a protracted trade war over time, while fears of a global economic slowdown also continue to rise.

European markets are expected to open Monday’s session downwards.

___MarketEvolution10 U.S. indices close a volatile August

On Friday, August 30, U.S. equities were little changed, as investors took a breather after a month of high volatility. Traders are now cautious about the beginning of September.

The major indices recorded their worst monthly data since May. The Dow fell 1.7% in August, while the S&P 500 lost 1.8% and the Nasdaq fell 2.6%.

Trade clashes between the US and China intensified in August, shaking markets.

The Cboe Volatility Index (VIX), considered the best indicator of fear, rose to 24.81 points in August. As a result, investors have bought traditionally safer assets, such as gold and silver.

Europe closes its doors tightly to the signs of relaxation of the trade war

European equities closed up on Friday, August 30, after China showed a softer tone in its trade war with the United States.

The Stoxx 600 pan-European index ended the session 0.6% higher with almost all sectors in positive territory. Basic stocks, exposed to China, rose 2.5%.

Meanwhile, British opposition parliamentarians plan to trigger an emergency debate to avoid a Brexit without an agreement. The UK FTSE 100 index, which rose by 0.3% at the close of the session, fell by 5.3% in August. It is its worst monthly decline since August 2015.

Friday’s rise marked the end of a very volatile month for European equities.

___ContexGen_02sep

The hardest members of the ECB charge against the battery of new stimuli

A new round of monetary stimuli could arrive in September, in the form of a large package, as suggested by several members of the Governing Council of the European Central Bank.

However, they may have announced it too quickly, as the members least sympathetic to monetary expansion had not yet pronounced themselves.

Jens Weidmann, Klaas Knot and Ewald Nowotny, presidents of the Bundesbank, the Dutch Central Bank and the Austrian National Bank, respectively, are against the stimuli of Mario Draghi.

Investors discount a 10 to 20 basis point drop in the deposit rate. In addition, they assume that the public debt purchase program and corporate debt will be restarted.

Banks are crossing their fingers for the ECB to introduce measures to mitigate the impact of negative interest rates on their accounts.

Brussels asks London for concrete proposals before discussing Brexit

The European Commission said it needs to see concrete proposals from the UK Government on their alternative to the controversial Irish clause.

Proposals from the UK Government that are compatible with the withdrawal agreement are expected before we can move forward.

British Prime Minister Boris Johnson promised to intensify negotiations with the European Union from September onwards in order to reach an exit agreement. His government rejects the agreement signed in 2018 and calls for the so-called safeguard to be replaced in order to avoid a border on the island of Ireland.

An EU spokesperson confirmed that the head of the British team, David Frost, has now asked to meet twice a week with the European team and that meetings are due to resume next week.

The European Commission has shown a willingness to work 24 hours a day, 7 days a week throughout the process and now the EU executive wants to see something concrete about the alternatives proposed by the Johnson government to the Irish safeguard.

This mechanism is designed to ensure that the border between Northern Ireland and the Republic of Ireland is kept open, as required by the Good Friday peace agreements that ended the Ulster conflict.

Inflation in the euro area remains at 1%

Inflation in the euro area remained stable in August at 1%.

Food prices rose by 2.1% and services by 1.3%. Energy prices fell by 0.6%.

Unemployment figures were released for the euro area, whose July rate remained at 7.5%. This remains the lowest level since July 2008.

Hurricane Dorian is expected to turn into a dangerous category 4 storm

The hurricane is now heading toward Florida’s Atlantic coast and evacuations have not yet been ordered, but many are expected when the storm hits land before Labour Day next Monday.

The entire state of Florida is under emergency declaration.

American Airlines said travelers who booked between Sept. 2 and Sept. 3 to or from 13 Florida airports can change their tickets without paying a fee.

Spirit Airlines and JetBlue Airways issued similar exemptions for several Florida airports, including Orlando, Fort Lauderdale and Jacksonville.

Southwest Airlines does not charge a flat rate for flight changes, but will not require passengers who wish to change flights to pay the difference in fare if they are able to fly within two weeks of their original travel date.

The airlines aren’t canceling flights from Florida yet, because the path of the storm isn’t clear yet.

The risk of devastating hurricane winds along the east coast and the Florida peninsula continues to increase, although it is too early to determine where the strongest winds will occur.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

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___MarketEvolution4

September 3, 2019

Asian markets show a mixed tone and the Reserve Bank of Australia keeps interest rates unchanged

Australian equities were mixed on Tuesday, September 3, as the Reserve Bank of Australia left its interest rate at 1%. It was a move already expected and it seems reasonable to anticipate a prolonged period of low interest rates in Australia, to advance in the reduction of unemployment and achieve more secure progress towards the inflation target, according to Governor Philip Lowe. The RBA had cut interest rates in June and July. The S&P/ASX 200 remained almost flat, with the financial sub-index only up 0.08%.

Mainland Chinese equities were mixed. Hong Kong’s Hang Seng index, Japan’s Nikkei 225 and South Korea’s Kospi were unchanged.

On Monday, September 2, American markets were closed for Labour Day.

The British pound was close to its lowest point for more than two years, due to investors’ growing concern about a hard Brexit.

The euro hit record lows in more than two years, while European Union economic data makes the European Central Bank expected to adopt stimulus measures at next week’s meeting.

Oil prices were mixed on Tuesday as the U.S.-China trade war continues to cause prices to stagnate. South Korean data added to concerns about emerging markets and a possible non-compliance with the OPEC resolution to control production is looming.

Gold prices fell during Tuesday’s Asian session, but fears of a global economic slowdown keep the value of the precious metal near multi-year highs. Investors are waiting for the U.S. ISM survey to get information on U.S. economic conditions. A better-than-expected result may lead to some temporary weakness in gold prices.

European markets are expected to open mixed on Tuesday.

___MarketEvolution8 US markets were closed for Labour Day

American markets remained closed.

On Friday, August 30, U.S. equities changed little as investors took a breather after a month of high volatility.

Traders are cautious about the beginning of September.

On Monday, September 2, US markets were closed for Labour Day.

Europe’s shares are bullish

European equities closed higher on Monday, September 2, with manufacturing data from China and Europe showing a slight improvement, but not enough to allay fears that global economic growth will slow.

The Stoxx 600 pan-European index rose slightly at the close of the session. The financial sector was the best with a 0.9% rise. Technology stocks were down 0.6%.

PMI data showed that manufacturing activity in the euro zone contracted for the seventh consecutive month in August, as lower demand weighed on businesses. Nevertheless, the 47.0 figure represented a modest improvement from the July 46.5 reading.

The UK’s main opposition Labour Party on Tuesday will publish its legislative plan to block a Brexit without agreement, but the Conservative-led government has so far refused to guarantee that it will comply with the new law.

___ContexGen_03sep

Investors dismiss a bad August but September may not be better

Investors may be happy to see August go, but September may not be better if there are still no positive developments in the trade war.

Markets enter September, anticipating a Federal Reserve interest rate cut in the middle of the month and worrying that the global economic downturn will reach the United States.

The S&P 500 fell about 2% during the month and is its worst result since May. August was a month of growing concerns and headlines moved the market in both directions.

The first week of September includes some important reports, such as the August Employment Report and the ISM Manufacturing Survey. The automotive industry publishes monthly vehicle sales.

Investors will also be watching for the possibility that face-to-face negotiations between U.S. and Chinese officials will take place in September, as expected after the last round of talks.

For the stock market, September is historically a month worse than August.

EUR/Dollar continues to look closer to 1.0725 level

In the short term the logical thing would be some other rebound of the single currency against the american dollar, fruit of the extreme daily and weekly overselling. But it would be a simple rebound.

The crossing tries to recover the support zone, recently perforated and this is the base of the bearish channel.

Even if it bounced back, the result of extreme overselling, what must be taken into account is that the trend is very bearish.

The impeccable succession of descending highs and lows is there and remains intact. Everything points to the price going to the support zone around 1.0725: the weekly bullish hole of April 2017.

It is normal for this gap to be filled, partially or completely, before seeing a potential bullish reaction in the euro.

Low bond yields could continue to decline

There seems to be nothing to stop the decline in bonds.

Bond yields around the world reached new lows, with investors worried about a possible global recession, the lack of progress in US-China trade talks and recent developments in the UK around Brexit.

Strategists expect yields to continue to fall, as the September calendar opens a flood of economic reports and key central bank meetings that will affect markets.

The scenario could be a disaster if yields continue to fall dramatically.

British opposition opposes hard Brexit

UK legislators to introduce legislation to block Britain from leaving the European Union without agreement.

The Labour Party, the main opposition party, will publish its legislative plan on Tuesday. However, the conservative-led government has so far refused to guarantee that it will comply with the new law.

Apparently conservative lawmakers have been threatened with expulsion from the party if they join efforts to block a Brexit without agreement.

Prime Minister Boris Johnson announced last week that Parliament would be suspended for five weeks, starting September 9, restricting the time for legislators who oppose the tough Brexit to debate and vote on proposals.

The measure has been greeted with nationwide protests that continued over the weekend.

DISCLAIMER

The research covered in this report should not be considered as a recommendation to operate. Opinions, news, research, analysis, prices or other information are provided as general market comments and not as investment advice.

Aviones3

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