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Market evolution

___MarketEvolution2

July 26, 2019

Asia-Pacific stocks fall amid less aggressive Federal Reserve expectations

Asian equities fell on Friday, July 26, amid expectations that the U.S. Federal Reserve could be less aggressive than expected with monetary policy when it meets next week.

Mainland Chinese equities fell at the end of the session. Hong Kong’s Hang Seng index fell by 0.45%, after it saw its biggest annual drop in exports in nearly three and a half years in June. Australia’s S&P/ASX 200 also fell slightly with most sectors down.

Japan’s Nikkei 225 fell 0.49%, with Softbank Group shares trading slightly higher. In South Korea, the Kospi fell 0.49%. Tokyo may decide to remove Seoul from the so-called white list, with trade restrictions, on August 2.

European markets rise slightly, after the ECB maintains interest rates.

The ECB kept interest rates stable, but outgoing President Mario Draghi pledged to further soften monetary policy as growth prospects deteriorate. At the press conference, Draghi said the economic outlook was getting worse and worse, citing a weak manufacturing sector as well as uncertainty over trade and Brexit. Central bank policymakers are also considering other measures to support the euro zone in the coming months, including the resumption of quantitative easing (QE).

The dollar rose to 108,620 yen, reaching a two-week high. The euro traded at $1.1151, a slight recovery from a two-month low. However, the EUR has lost value over the past week. The British pound lost ground and is on its way to a 0.5% weekly loss. This currency has stabilized since Boris Johnson became the new British prime minister, but there is still uncertainty about Britain’s negotiations to leave the European Union.

Oil prices rose on Friday, due to concerns about tensions in the Middle East, offset by declining global economic growth prospects in the midst of the US-China trade war. Growing challenges in the macroeconomic environment have slowed upward bets, as risk appetite remains weak in the face of possible weakness in global fuel demand.

Gold rallied on Friday, after the fall of the previous session, as investors waited for US economic growth data, which could give clues about the Federal Reserve’s monetary policy meeting. The precious metal has lost 0.5% so far this week, putting it on track for its first weekly decline of the last three.

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

___MarketEvolution7 Biggest movements out of hours

U.S. stocks make the biggest movements out of hours.

Alphabet shares rose 9% in extended trading on Thursday, July 25, after Google’s parent company reported earnings in the second quarter that exceeded Wall Street estimates.

Amazon fell 2.5% after the company reported mixed results in the second quarter and lower than expected growth of 37% in Amazon Web Services, it’s most lucrative business.

Intel’s stock rose more than 6% after the chips manufacturer’s second quarter earnings exceeded Wall Street’s expectations and the company published an optimistic forecast.

European shares close with investors taking profits

The ECB kept interest rates stable on Thursday, July 25, but outgoing President Mario Draghi pledged to further soften monetary policy as growth prospects deteriorate.

Traders are closely following the evolution of business results. Construction and materials values rose, leading the gains.

The eurozone trade balance showed a surplus of 23 billion euros in May. The July economic sentiment figures for Germany stood at -24.5 against expectations of -22.3, adding to the economic uncertainty surrounding Europe’s largest economy.

___ContexGen_26jul

The Federal Reserve is leading a global push to cut interest rates

Europe is preparing to follow their example.

As the ECB cuts interest rates, a wave of central banks could do the same in the hope of boosting economies and maintaining control over their currencies.

Several banks have already mobilized to ease the situation before the Federal Reserve’s expected interest rate cut next week.

The current situation is reminiscent of the financial crisis, when all central banks agreed to coordinate their policies.

Technology shares reach highest levels ever reached despite trade war

The shares of the big technology companies reached an all-time high on Tuesday, with the help of a semiconductor industry that is recovering amid some signs of progress in the U.S.-China trade war.

The semiconductor sector has risen 10.5% in the last month.

The semiconductor sector is a cyclical sector and is leading the way towards more defensive software and a possible sign of change in stock market leadership.

JP Morgan warns of a significant sale of U.S. shares in this quarter

American stocks have gone up so far this year. However, that rise could end this quarter.

A possible sale would be driven by a downward revision of next year’s earnings outlook. Analysts expect earnings to grow by around 14% in 2020, which seems quite high given the weak global economic outlook.

The Fed is expected to cut interest rates at its next meeting later this month. Investors will then be ready to turn their attention to other factors such as corporate earnings.

Many analysts will start adjusting their 2020 earnings forecasts in the second half of this year, so that will determine the performance of stocks in the coming months.

The social weariness with taxes has gone to more

According to polls, around 60% of the population considers that they pay too much, especially in relation to what they receive in return.

If we sanction tobacco, it is so that people stop smoking. If we penalise alcohol, it is to prevent irresponsible consumption. Why do we tax job creation, investment, to the extent that an average income loses half of its wealth in taxes?

The obsession with punishing savers and entrepreneurs is surprising… Raising taxes on the rich is a mistake, a serious mistake. It is an economic error and it is a moral error.

You need a fair system that rewards effort. However, in some countries, what they are doing is quite the opposite. The taxpayer should not be punished: he should be sent flowers.

Stop mistreating those who create wealth. Friends of high taxes hate rich people, they hate successful people. But they forget the important thing: poverty.

The social challenge we face is to enrich the poor, not impoverish the rich. We must help those who are below, not overthrow those who are above.

No country thrives on punishing wealth creators.

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

July 29, 2019

Asian equities plummet with investors alert to resumption of U.S.-China trade talks

On Monday, July 29, Asian indices fell for the most part, with anticipation of the resumption of U.S.-China negotiations to be held in Beijing later this week.

In mainland China, the Shanghai compound dropped slightly. Hong Kong’s Hang Seng index fell by 1.20% as tensions remain high in the city after another clash between protesters and police over the weekend. The Nikkei 225 in Japan fell slightly with Softbank Group shares rising more than 2.5%. In South Korea the Kospi fell by 1.49%, as the shares of chipmaker SK Hynix fell by 2.26%. Australia’s S&P/ASX 200 index rose slightly, as most sectors traded higher.

Wall Street traded higher on Friday, July 26, following the release of a US gross domestic product that slowed to 2.1% in the second quarter. The Nasdaq and the S&P 500, which were up 2% and 1% respectively, hit record highs during the session.

Traders are awaiting the 30th and 31st of July monetary policy meeting of the US Central Bank, which is expected to cut interest rates by at least 25 basis points.

The dollar hit a two-month high against most Asian currencies. Recently, the dollar has been supported by U.S. economic data. However, eurozone data has been weak lately, so the dollar could rise despite a Federal Reserve interest rate cut.

The European Central Bank said last week that it is likely to cut interest rates and take further easing measures in September to shore up the Eurozone’s economic downturn.

The Bank of Japan will begin a two-day monetary policy meeting on Monday. Traders expect the BoJ to send unconvincing messages and may try to give an appearance of relief by shifting its focus to the future.

The Australian dollar fell slightly from a one-month low after Chinese data showed that the country’s industrial companies’ profits contracted in June.

The pound fell to its lowest level in 28 months, as a tough Brexit appears increasingly likely. Ministers said the British government is working on the assumption that the European Union will not renegotiate its Brexit agreement and is speeding up preparations to leave the bloc on October 31 without an agreement.

Oil prices fell on Monday, while investors worry about the global economic growth outlook and while weekend talks between Iran and major powers ended with a positive feeling. This suggests a easing of tensions in the Middle East. Economic growth in the US slowed less than expected in the second quarter, with consumer spending booming, reinforcing the outlook for oil consumption. However, growth outside the United States is slowing more rapidly.

Gold rose sharply on Monday, ahead of this week’s Federal Reserve meeting where U.S. interest rates are expected to fall.

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

___MarketEvolution10 Record highs during the session

New record highs on Wall Street after U.S. GDP slowdown.

Wall Street traded higher on Friday, July 26, following the release of a US gross domestic product that slowed to 2.1% in the second quarter.

The Nasdaq and the S&P 500, which were up 2% and 1% respectively, hit record highs during the session.

The earnings release parade continued. Twitter shot up 9.65% after adding more revenue and users than expected. However, its big unresolved issue is net profit, which has fallen from the previous year.

Amazon disappointed, after achieving a profit per share of $5.22, compared to $5.56 expected. On the other hand, Alphabet has shot up 9.62% after achieving a profit per share of $14.21, when experts expected $11.10.

McDonald’s has risen after presenting its accounts, with an improvement of 1% over the same period last year.

On the other hand, Apple has signed an agreement with Intel whereby it acquires most of the smartphone modem business from the integrated circuit manufacturer, valued at 1,000 million dollars.

European equities close higher after the ECB maintains interest rates

European shares closed on Friday 26th July with increases after the European Central Bank suggested that it could reduce the cost of loans to face the slowdown in the euro area.

The Stoxx 600 pan-European index closed with a slight rise, with most sectors in positive territory. Telecommunications equities were the best, rising by more than 2%.

Following the ECB meeting, Draghi said the economic outlook was getting worse and worse, citing a weak manufacturing sector as well as uncertainty over trade and Brexit.

___ContexGen_29jul

S&P 500 and Nasdaq reached new highs

Investors anticipate a cut in Federal Reserve interest rates and a better-than-expected earnings season.

While business results are key, the Fed is likely to have a greater impact on the market. The Central Bank is expected to cut interest rates for the first time in more than a decade on Wednesday.

In recent weeks, economic data has begun to show signs of improvement. Sales to consumers, who represent 70% of the economy, showed strength in the second quarter with an increase of 4.3% which is their best reading since late 2017.

Investors will also be watching the headlines about the trade war as the US delegation returns to China for the first round of face-to-face talks since May.

Trump threatens to retaliate against France over Google tax

The president of the United States has stated that he will take action against France for the imposition of a tax on the income of the digital services of the great American technologies.

France has just imposed a digital tax on large US technology companies. According to Trump, if someone levies taxes on them, it must be their country of origin, so they do not consider a tax levied in other countries to be fair.

This tax affects companies whose annual revenues exceed 750 million euros worldwide, so that some 30 companies could be affected, most of them American, although the list also includes Chinese, British and German firms.

The new French tax is set at 3% of the turnover of these companies’ digital business, in order to force them to pay taxes in France on the profits they make from French Internet users.

The G7 countries agreed in principle that Internet companies should pay taxes in countries where they are digitally active, even if they are not physically present, in order to prevent them from transferring their profits to tax havens.

Tesla and Elon Musk are left without the support of the great analysts

‘It’s unreliable…’

These are the words behind the reports of the great Wall Street analysts, after Tesla’s quarterly results.

408 million dollars. These are the red numbers that focus the eyes on Tesla’s accounts. These losses are three times what the market consensus predicted, despite the fact that the sales of its Model 3 have risen.

Companies such as Goldman Sachs, Barclays, Bank of America, RBC, Citi and JP Morgan are betting on ‘maintain’.

Nomura, Bernstein and Morgan Stanley are betting on ‘selling’.

For JP Morgan everything can be summed up in the combination of two factors: results below expectations, especially in income. On the other hand, the fact that the bad figures take place despite the record deliveries of cars.

Twitter skyrockets as more revenue and users add up than expected

Twitter skyrocketed 9.65% after its results, reaching $41,795 per share.

The popular social network has recorded more revenue than expected and added more users than anticipated by analysts. Its pending subject has been the profit, which has fallen over the previous year.

Active users have increased by 5 million compared to the 3 expected by analysts.

Profits from these users were 139 million, compared to 134 million in the previous period.

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

July 30, 2019

Asian Markets rise and Bank of Japan keeps interest rates stable

Asia-Pacific stocks rose on Tuesday, July 30, while investors expect the U.S.-China trade talks to evolve this week in Shanghai.

The Bank of Japan kept its monetary environment stable on Tuesday, but said it would apply accommodative measures without hesitation to reach the 2% inflation target if the economy loses momentum.

The Nikkei 225 rose slightly as Fanuc shares rose 2.93%. In mainland China, the Shanghai compound appreciated by 0.65%. In South Korea, Kospi rose 0.60% after Monday’s fall and Samsung Electronics shares rose 1%. In Australia the S&P/ASX 200 rose slightly.

Hong Kong’s Hang Seng index reduced Monday’s losses until it recovered after a press conference in which Beijing reiterated its strong support for the city’s leader, Carrie Lam. They also suggested that there will be no change in his management of Hong Kong in the near future.

U.S. stocks traded unchanged on Monday, July 29, while Wall Street softened its expectations for this week’s trade negotiations between Washington and Beijing. U.S. and Chinese negotiators are meeting for the first time since they agreed to a truce at last month’s G-20 meeting.

On Tuesday, oil prices rose for the fourth day in a row due to optimism about the Federal Reserve meeting, which this week will cut interest rates for the first time in more than ten years. This should support economic growth and fuel demand in the world’s largest oil consumer.

Gold reached a two-month high on Tuesday as investors await the results of the Federal Reserve’s two-day session. Liquidity remains scarce and traders appear to be holding back before the Fed shows its monetary policy. The U.S. dollar revaluates, making gold more expensive for holders of other currencies.

European markets are expected to open mixed on Tuesday.

___MarketEvolution8 Investors moderate their expectations

U.S. Stocks remain flat as investors moderate their expectations.

U.S. equities traded flat on Monday, July 29, as Wall Street softened expectations for this week’s Washington-Beijing trade negotiations.

Markets are also paying close attention to the Federal Reserve’s latest monetary policy decision.

The Nasdaq Composite was bearish. Amazon fell 2%, Microsoft lost 0.6% and Facebook lost 1.5%.

The Dow Jones Industrial Average rose 70 points, while earnings at Apple and 3M offset declines at Goldman Sachs and Boeing.

The S&P 500 fell slightly as the values of discretionary consumer and communication services negatively influenced the index.

European shares closed on the rise pending the resumption of trade talks

European stocks closed up on Monday, July 29, as U.S. and Chinese negotiators prepare to meet in Shanghai.

Expectations of progress during the impending two-day meeting in Shanghai are low, and White House economic adviser Larry Kudlow said negotiators are expected to return to where they left off last May.

Mergers and acquisitions are high on the agenda.

The Stoxx 600 pan-European index regained its bullish trend and closed with a slight rise. The markets reacted positively to a number of potential mergers.

Telecommunications and financial services stocks closed with gains of 1.5% and 1.7% respectively, while the automobile sector struggled to move forward.

The new British Prime Minister and leader of the Conservative Party, Boris Johnson, plans to visit Scotland on Monday after the head of the Scottish Conservatives said he would refuse to support the UK’s exit from the European Union without an agreement.

___ContexGen_30jul

Federal Reserve about to cut rates for the first time since 2008

The Federal Reserve is expected to cut interest rates for the first time in more than a decade on Wednesday. It is a precautionary measure in the face of growing concerns about the impact of trade wars and the global economic slowdown.

The July employment report, which will be released on Friday, should show that the U.S. economy remains strong. It is expected to create 170,000 new jobs, with an unemployment rate of 3.7%.

Most analysts expect between one and three rate cuts this year and there is consensus that this first cut will be a quarter of a percentage point.

The European Union is depriving five countries of some market access rights

The European Commission will block the access of five countries to certain European Union financial markets. This could also affect the UK when it leaves the bloc.

The European Commission will block access by Argentina, Australia, Brazil, Canada and Singapore to parts of the European Union’s financial market.

The five countries are no longer considered to regulate credit rating agencies with the same rigour as the block. This will be the first time that these rights have been withdrawn.

FAANG’ changed to ‘BAANG’ for a new era

BAANG equals Barrick Gold, AngloGold, Agnico Eagle Mines, Franco-Nevada and Gold Fields.

These values would represent a good alternative to the exhausted FAANG, who may have reached their peaks and begun to lose strength.

Gold has appreciated strongly, but is still well below its 1900 highs and has a long way to go, just like the other BAANG stocks.

Treasury Yields move lower

U.S. government debt prices rose as traders await news from the Federal Reserve later this week.

Traders are preparing for a possible interest rate cut for the first time in more than a decade. The U.S. Federal Reserve meets on Tuesday and Wednesday. At the end of its meeting it will announce its latest monetary policy decision.

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

July 31, 2019

Asian equities fall as investors wait for the Fed’s decision and Samsung drops more than 2%

Asia-Pacific stocks traded lower on Wednesday, July 31, amid expectations of a resolution to the U.S.-China trade war. Meanwhile, investors are waiting for the Fed’s announcement of its interest rate decision on Wednesday.

Mainland Chinese equities fell at the end of the session. In Hong Kong, the Hang Seng index fell by 1.11%. The Nikkei 225 in Japan fell slightly, with Fast Retailing stocks losing 1.54%.

U.S. indices fell on Tuesday, July 30, after the U.S. president renewed his attacks on China, diminishing hopes that the world’s two largest economies will reach a trade agreement.

At the start of Wednesday’s trading, the dollar held steady as traders eagerly await the results of the Federal Reserve meeting. Any reference to monetary policy will give the dollar an extra boost.

On Tuesday, the Bank of Japan refrained from implementing stimulus measures, but pledged to do so without hesitation if a global slowdown jeopardizes the country’s economic recovery.

The pound has fallen this week as investors discount the possibility that Britain will leave the European Union without an agreement. On Tuesday the British currency managed to stabilize.

The Australian dollar recovered from a six-week low after data showed that the second quarter CPI rose slightly faster than expected.

Crude Oil rose for the fifth consecutive day during Wednesday’s Asian session. It was driven by a larger-than-expected drop in U.S. inventories and investors awaiting the Fed’s first interest rate cut in ten years. The market is quite optimistic about the Federal Reserve and as a result there will likely be more demand for oil.

Gold falls on Wednesday’s Asian session, while the dollar remains steady and investors anticipate interest rate cuts.

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

___MarketEvolution8 U.S. president renewed his attacks on China

U.S. shares fall following Trump’s attack on China.

U.S. indices fell Tuesday, July 30, after the U.S. president renewed his attacks on China, diminishing hope that the world’s two largest economies will reach a trade agreement.

Trump said China is not keeping its promise to buy more U.S. agricultural products. But China insists it is buying. A U.S. trade delegation traveled to China on Monday to negotiate with Chinese officials.

The results season continues with the release of Merck, Procter & Gamble and GrubHub. The technology giant Apple plans to publish its results Tuesday after the end of the session.

European equities close with a sharp drop

European equity markets closed down on Tuesday, July 30, as investors digest the results season.

The Stoxx 600 pan-European index provisionally closed 1.45% lower. Autos and banks led the losses, both above 2%. All sectors and major exchanges traded in red.

Germany’s DAX was one of the worst performers, after a series of weak German corporate giants’ results, which dropped around 2% below.

The pound hit a 28-month low on Monday, as fears that the UK will leave the European Union without an agreement intensify. Prime Minister Boris Johnson said the current divorce settlement was dead and warned that unless the European Union is willing to renegotiate, Britain will leave without an agreement on October 31.

___ContexGen_31jul

Trump launches new warnings to China

Markets receive additional doses of tension with Donald Trump’s new messages about China.

He now threatens the Chinese authorities with a much tougher trade deal if they don’t accept a deal before the next U.S. elections.

For now, China is breaking its promise to buy back U.S. agricultural products, and Trump is resorting to this breach to criticize that China always changes the deal at the last minute for its own benefit.

Bank of Japan lowers its economic outlook and maintains monetary policy

The Bank of Japan kept its monetary policy unchanged, with a negative benchmark interest rate, while slightly revising its projections on inflation and economic growth downwards.

In BoJ it agreed to continue its monetary stimulus program started in 2013 and will continue its purchases of government bonds so that the yield of those with a 10-year term remains around 0%.

These purchases will be made in a flexible manner so that the remaining amount increases at an annual rate of 80 trillion yen.

Some important factors for the evolution of the markets

While investors are watching the Fed, some analysts believe that there are other factors that will be more important for the markets.

In order to achieve significant rises in 2020, corporate profits must be taken into account. The focus should be on 2020 profits.

Analysts predict that the S&P 500’s earnings will expand by 3% this year, accelerating its growth to 11% in 2020.

There are three factors to look at: the Federal Reserve, not just by cutting rates, but by the path it is going to follow. Trade is the second factor, to see if there is a second tranche of tariffs. The third factor focuses on the season of business results, which is vital.

Facebook warns investors that Libra Digital Currency may never see the light

Facebook reminded investors in its latest quarterly report that while it expects to launch its digital currency in 2020, there are a number of factors that could prevent that from happening.

Facebook said it fears for the step back taken by lawmakers and regulators since the currency was announced in June.

Libra has come under significant scrutiny from governments and regulators in multiple jurisdictions. Since Libra and Calibra’s plans were unveiled last month, the company has faced criticism from public officials in the United States and abroad.

The introduction of the new currency raises great uncertainty and there can be no guarantee that Libra, or associated products and services, will be available at the desired time.

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 1, 2019

Chinese equities drop as manufacturing activity shrank in July

Asia-Pacific markets were bearish on Thursday, August 1, after it was reported that Chinese factory activity contracted in July.

Mainland Chinese equities fell at the end of the session. Australia’s S&P/ASX 200 was down slightly, with most sectors trading lower.

South Korea’s Kospi index returned to negative territory. Shares of the leading chip manufacturer SK Hynix rose by 1.3%, while Samsung Electronics declined by 0.33%. July trade data showed that South Korean exports fell by 11% year-on-year, which was slightly better than the 11.3% drop forecast by analysts. The data comes amid the trade dispute between Seoul and Tokyo. Last month, Japan imposed restrictions on exports of important high-tech materials to South Korea that are then used by technology companies. This is doing a lot of damage to South Korea. The Japanese Nikkei 225 closed almost unchanged.

U.S. stock markets fell on Wednesday, July 31, after Powell hinted that lowering interest rates does not signify the beginning of a trend. The Federal Reserve cut interest rates by 25 basis points, meeting market expectations.

Adopting interest rate cuts the way the Fed plans is something like an insurance policy and not like the beginning of a new trend. This attitude has created uncertainty in the markets. The Federal Reserve is not now committed to cutting interest rates further.

On Thursday, the dollar hit a two-year high against the euro and the Japanese yen. It does so while the Federal Reserve Chairman ruled out the possibility of a long cycle of monetary policy easing.

Oil prices plummeted on Thursday, falling for the first time in six days after Powell’s press conference. In addition, talks between China and the United States ended without any apparent progress. Oil falls occur despite a larger than expected drop in US inventories and a decline in crude oil production among OPEC members, along with a cut in Libyan exports. However, US production rose and the US market remains well supplied.

Gold hit a two-week low after the US Federal Reserve cut interest rates by 25 basis points, as expected. However, the Fed’s stance pushed the dollar up to a two-year high. Gold purchases are now more expensive.

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

___MarketEvolution7 Powell dashed hopes for further interest rate cuts

Dow Falls 330 points on worst day since May.

U.S. stock markets fell on Wednesday, July 31, after Powell hinted that lowering interest rates does not signify the beginning of a trend. In fact, Jerome Powell dashed hopes for further interest rate cuts later this year.

The stock market seemed disappointed with the news, perhaps because Powell did not guarantee further cuts for September.

The Fed cut interest rates by 25 basis points, meeting market expectations. The central bank cited world events, along with moderate inflation as reasons to soften monetary conditions.

European shares close on the rise

On Wednesday, July 31, the European stock market closed bullish as investors awaited the Federal Reserve’s interest rate decision.

The pan-European Stoxx 600 rose slightly, with most sectors and major exchanges in positive territory. The FTSE 100 in London was the most atypical in Europe, falling 0.6% as the pound moved away from recent lows.

European Union statistics, released on Wednesday, showed that economic growth in the eurozone halved in the April-June period and that inflation slowed sharply in July, despite unemployment falling to its lowest level in 11 years.

___ContexGen_01ago

Eurozone economy grows slightly

The euro zone stopped falling in the second quarter as it grew 0.2% between April and June. Year-on-year, the GDP of the single currency region grew by 1.1%.

In the European Union as a whole, the economy grew 0.2% in the second quarter. The year-on-year expansion of the EU slowed to 1.3%, its worst figure since the end of 2013.

Prices in the euro zone have moderated by two tenths, to a rate of 1.1% in July. This represents the lowest level of inflation since December 2016.

The unemployment rate in the euro area fell by one tenth in June to 7.5%. It is its lowest level since July 2008.

In the European Union as a whole it remained at 6.3%, its best reading since 2000.

Spain continues to be the second country in the EU with the worst unemployment figures, with 14%, only behind Greece’s 17.6%.

Trump calls for big interest rate cuts

President Donald Trump maintains pressure on the Federal Reserve, asking the central bank to cut interest rates substantially.

Trump said he believes the Fed should have acted sooner to cut interest rates. He believes the economy would have been better off without the rate hikes that began in December 2015.

Despite disapproving of the Federal Reserve’s actions, Trump said he believes the economy is strong enough to withstand tighter monetary policy.

The worst fears for the banking sector have come true

Information piracy is one of the worst fears of any bank CEO.

A lone hacker managed to steal the personal information of more than 100 million customers of Capital One, the Virginia-based bank.

In the two largest U.S. banks alone, J.P. Morgan Chase and Bank of America, cybersecurity budgets have increased to $1.4 billion.

The industry has been using everything from low-tech password reminders to sophisticated data analysis and risk management programs to stay ahead of criminals.

The security threat may be the greatest threat to the U.S. financial system.

Nobel laureate Robert Shiller calls for higher interest rates

Economist Robert Shiller, winner of the Nobel Prize in Economics, would see a quarter-point increase in interest rates justified. That’s right, he advocates rate increases rather than cuts.

According to Shiller, the United States still has a very low unemployment rate, which reflects that the economy is hot.

Moreover, although the inflation rate is below the target, it is not far below it. The target is 2% while current inflation is 1.5%.

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

___MarketEvolution1

August 2, 2019

Asia’s shares weaken after Trump announces more tariffs on China

Asian equities fell on Friday, August 2, after a surprising U.S. announcement that increased trade tensions between Washington and Beijing.

U.S. President Donald Trump said Thursday that beginning September 1, the United States will apply 10% tariffs on another $300 billion in Chinese products. The reason is that China has not purchased large quantities of U.S. agricultural products as promised.

After the unexpected move, mainland China’s shares fell sharply. Japanese stock losses even surpassed those in Chinese markets. The Nikkei 225 sank by 2.67%. In South Korea, the Kospi fell by 0.9%. Australia’s S&P/ASX 200 fell slightly, despite the country’s strongest retail sales growth in four months.

US equities rose on Thursday, August 1, with new hopes that the Federal Reserve will raise rates again later this year, despite Powell.

This Friday, U.S. Non-Farm Payrolls are expected to show that 164,000 new jobs were created in July. That’s less than the 224,000 new jobs created the previous month. Under normal circumstances, non-agricultural payroll data would attract the attention of traders, but the impact of Trump’s decision to impose more tariffs on Chinese products will take center stage.

The Japanese yen hit a five-week high against the dollar and a two-and-a-half year high against the British pound after the U.S. broke a truce in the trade war, boosting demand for safe haven currencies.

An escalation in trade friction between the world’s two largest economies threatens to increase stock volatility and bond yields, which could weigh on the dollar and the currencies of commodity exporters trading with China.

The British pound hit a 30-month low against the dollar due to concerns about a hard Brexit and the Bank of England’s cut in economic expectations.

Oil prices rose more than a dollar on Friday, recovering from their biggest falls in years. Trade uncertainty is back in the spotlight. The steady decline in US inventories is now in the background.

During Friday’s Asian trading, gold fell almost 1%, as investors took their profits after the announcement of new tariffs. The precious metal has risen around 0.9% in the week and is headed for its third weekly gain in the last four.

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

___MarketEvolution7 Technology stocks led the rise

The Dow goes up 300 points.

U.S. equities rose on Thursday, August 1, with new hopes that the Fed will raise rates again later this year, despite Powell.

Technology stocks led the rise. The sector gained 2.2%. Western Digital was the best-performing stock in the industry, growing 6.8%. Other technology-related stocks such as Facebook, Amazon, Apple, Netflix and Alphabet were also up.

Hopes for another rate cut rose after IHS Markit’s U.S. manufacturing PMI fell in July to its lowest level since September 2009.

European shares close on the rise thanks to strong business performance

European equities traded higher on Thursday, August 1, after strong profits reversed early losses caused by the Fed.

The Stoxx 600 pan-European index closed 0.41% higher. It was led by a 2.2% gain in financial services equities.

Core resources plummeted by 3.2% as a result of a heavy loss for Tenaris after the Luxembourg-based steel company failed to meet second quarter earnings expectations.

In the UK, the Bank of England voted unanimously to keep interest rates at 0.75% and cut its growth forecasts in the face of growing Brexit concerns and the global economic slowdown.

The FTSE 100 was the only major European index to lose value.

The UK PMI showed that British manufacturers’ production in July fell more than ever in seven years because of Brexit and a lack of global demand.

___ContexGen_02ago

Bank of England keeps rates unchanged and expects lower growth from Brexit

As expected, the Bank of England kept interest rates unchanged and also voted unanimously not to introduce variations in its unconventional monetary stimulus measures.

However, it has cut the body’s growth projections, coinciding with a pound plunge to nearly three-year lows.

The Agency’s warning, according to experts, is that divorce from the European Union now carries significant risks of dragging the country into recession.

In his press appearance, Carney acknowledged that in the event that the EU is abandoned without a pact and without transition, the pound sterling is likely to fall, risk on UK assets will rise and volatility will soar.

Trump says Powell defrauded by not clearly pointing out more interest rate cuts

President Donald Trump said the Federal Reserve chairman defrauded, despite lowering his benchmark rate by a quarter of a point.

The stock market was aggressively sold after Powell said at a press conference that the measure was only a mid-cycle adjustment.

U.S. imposes sanctions on Iran’s Foreign Minister

The United States imposed sanctions on Iranian Foreign Minister Mohammad Javad Zarif, damaging diplomatic talks.

The Treasury Department said it imposes sanctions on Zarif for acting on behalf of Iran’s supreme leader, Ayatollah Ali Khamenei. Zarif dismissed the action and said it would not affect him.

Fears of a direct U.S.-Iranian conflict have increased since May with several attacks on oil tankers in the Gulf, the downing of a remote-controlled Iran surveillance plane and a plan of U.S. air strikes that Trump suspended at the last minute.

Trump offers Putin help with Siberian forest fires

Donald Trump offered his Russian counterpart, Vladimir Putin, help to put out the huge forest fires that are ravaging Siberia. It is a movement that Putin took as a sign that ties between the two leaders can be re-established.

President Putin expressed his sincere gratitude for his attentive attitude and for the offer of help and support.

The Kremlin said the two leaders had spoken on the phone on Washington’s initiative, hours after Putin ordered the Russian army to help firefighters fight forest fires.

The fires have spread to about 3 million hectares of forest, an area about the size of Belgium. This has caused smoke to spread throughout Siberia and several regions to declare states of emergency.

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 5, 2019

Hong Kong shares drop almost 3% as city prepares for more riots amid general strike

Hong Kong shares fell on Monday, August 5, as the city prepares for major upheavals amid a general strike aimed at halting activity. Carrie Lam, Hong Kong’s executive director, said Monday that she believed the city was on the verge of a very dangerous situation. The riots in Hong Kong began in early June, when protesters took to the streets to oppose a proposed extradition law, which has since been suspended but not fully withdrawn. Monday’s strike followed another weekend of violent protests.

In mainland China, the Shanghai compound fell by 0.91% and the Shenzhen component fell by 0.77%. These moves came after Caixin’s Purchasing Managers’ Index (PMI) for July reached its lowest level in 5 months. It stood at 51.6 against a reading of 52.0 in June.

Other Asian markets also traded lower amid concerns about the trade dispute between Beijing and Washington. In Japan, the Nikkei 225 fell 2.22%, adding to Friday’s losses, when it had fallen more than 2%. SoftBank Group stocks fell by 3.89%. South Korean Kospi fell by 2.44% as the country’s leading technology and manufacturing brands lost ground.

On Monday, Seoul announced plans to make large investments in research and development to encourage local production of materials and equipment. That measure aims to reduce South Korea’s dependence on Japanese imports after Tokyo last week removed the country from its so-called ‘white list’ of trading partners with advantageous export status.

Australia’s S&P/ASX 200 lost 1.85% with most sectors falling.

U.S. equities fell on Friday, August 2, after the U.S. president stoked U.S.-China trade fears by announcing more tariffs and as investors digested U.S. employment data. The July U.S. Employment Report has been released. The U.S. economy has generated 164,000 new non-agricultural payrolls, in line with expectations. The unemployment rate has remained at 3.7%.

The Chinese yuan fell more than 1% on Monday and hit an 11-year low on fear of a sharp escalation in the U.S.-China trade war. The current situation has caused other currencies in the region to fall. Investors are now betting on safe-haven currencies. The Japanese yen reached a seven-month high.

The U.S. dollar fell against most of the safe-haven currencies. The yen fell to a low of 105.80 yen. The EUR rose slightly against the Dollar from a two-year low on Thursday. The Australian dollar fell 0.5% against the dollar to its lowest level in seven months.

Oil prices rose by more than 3% on Friday, a rebound from their biggest drop in several years on the U.S. initiative to impose more tariffs on Chinese imports. The tariffs, which will come into effect on September 1, intensify the trade war between the world’s two major economies. Any resulting economic slowdown could hurt demand for crude oil.

During Monday’s Asian trading, gold reached record highs in six years. The escalation of the U.S.-China trade war, coupled with concerns about global growth, led investors to take refuge in safe assets. Gold is benefiting from global concerns about growth prospects and central banks are likely to maintain their accommodative stance. In this situation, demand for safe haven currencies and gold is increasing.

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

___MarketEvolution10 Fearing trade war will continue

Dow drops 270 points fearing trade war will continue.

U.S. equities fell on Friday, August 2, after the U.S. president stoked U.S.-China trade fears by announcing more tariffs and investors digesting U.S. employment data.

The S&P 500 and Nasdaq fell more than 3% in a week that was the worst since 2019. The Dow has also fallen 3% this week.

Trump said he was open to stopping tariff hikes if China increased its U.S. agricultural purchases.

China’s Foreign Ministry opposed Trump’s latest tariff threat, saying the world’s largest economy should give up its illusions, take some responsibility and get back on track to resolve the trade war.

The July U.S. employment report has been released. The U.S. economy has generated 164,000 new non-agricultural payrolls, in line with expectations. The unemployment rate has remained at 3.7%.

Europe falls after Trump’s new setback to China

The new imposition of tariffs on China slows down progress in Europe on Friday 2 August.

To an extent no one expected, Trump has announced 10% tariffs on Chinese products. The move led Wall Street to close with falls of around 1% on Thursday and has led to falls of between 1.5% and 2.5% in Asia. Europe fell 2% on average.

The markets have had a bad week hand in hand with business results, the decline of the pound with a hard Brexit or a Fed that has not lived up to expectations.

Oil prices bounce back after new tariffs are imposed on China

Oil prices rose by around 2% on Friday.

Oil has consolidated with a strong rally. However, volatility is likely to remain high as Chinese retaliatory measures become known in the coming days.

The measure, which will come into effect on September 1, intensifies a trade war between the world’s two major economies.

The rise occurs despite a shaky world demand.

The amount of crude processed in US oil refineries is 1.3% lower than in the same period last year.

U.S. Senate approves two-year budget agreement

The Senate on Thursday passed a bill to increase the U.S. budget and raise the debt ceiling for the next two years.

The new legislation passed by 67-28 votes. Twenty-three Republicans and five Democrats voted against a bill that passed the House last week, despite weak Republican support.

Conservative lawmakers and advocates have complained that the agreement, which was concluded in July between the White House and congressional leaders from both parties, fails to take action to curb spending or reduce the U.S. deficit.

Goldman Sachs uses $100 million to leave access to stock prices in milliseconds

The investment bank recently approved a three-year plan to spend more than $100 million on revising its stock trading platform.

Goldman Sachs is targeting the world’s largest hedge funds. It targets more than a dozen quantum funds, intended to represent a wide range of trading styles.

The project focuses on improving the technology in its central trading platform, designed to be fast and reliable, and extends it to 32 markets around the world, including trading clearing and settlement, share allocation, share lending and trade reporting.

United States ends Reagan-era nuclear missile pact with Russia

The United States has formally withdrawn from a decades-old treaty on intermediate-range nuclear forces that banned ground-launched missiles with a range of 310 to 3,400 miles.

The 1987 Reagan-era treaty ended after Moscow refused to destroy its intermediate-range SSC-8 cruise missile. The SSC-8 missile can fly with conventional or nuclear explosives.

President Donald Trump announced in February that he would terminate the agreement unless Russia lifted its missile system.

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 6, 2019

Asian stocks fall amid trade uncertainty between U.S. and China

Asian markets reduced their losses in the end but remain at a low level on Tuesday, August 6, as the U.S.-China trade war intensifies after Beijing confirmed that it is suspending agricultural purchases in response to new U.S. tariffs.

The People’s Bank of China set the average yuan exchange rate at 6.9683 yuan per dollar down from the key support of 7 yuan per dollar respected so far. After the sharp weakening of the yuan, the U.S. Treasury called China a ‘currency manipulator’.

The Japanese Nikkei 225 fell 0.77% at the end of the session. In South Korea, the Kospi dropped slightly and Australia’s S&P/ASX 200 fell 1.98%.

US equities fell sharply on Monday, August 5, as the trade war between the world’s two largest economies and with China retaliating intensifies. Until now the Chinese always lowered their heads and tried to continue negotiating, but the problem is that this time they do not. And they have decided to fight a battle. The first measure has been the devaluation of the Chinese currency. The second measure has been to stop buying American products via state-owned companies. It has been leaked that China has ordered these kinds of companies to stop buying agricultural products from the United States.

With an escalating trade war, as JP Morgan has rightly said, the chances of escaping a global recession are very slim. U.S. interest rate curves are clearly warning that recession is only a matter of time. The spread between the three-month and ten-year bond curves, which have been invested at their highest level since 2007, stands out. In the last 50 years whenever you have reached investment levels so you have ended up with recession. A global recession is possible in six to nine months unless Donald Trump significantly rectifies his attitude.

The dollar index hit a two-week low, while long-term U.S. Treasury yields fell the most in 14 months.

Crude Oil rose on Tuesday after hitting its lowest level since January. Traders are betting on a fall in repurchase prices to ensure profits after recent falls caused by the escalation of the U.S.-China trade dispute.

On Tuesday, gold prices remained firm at six-year highs after the U.S. designated Beijing as a ‘currency manipulator’. There have been comments that China will continue to use its monetary weapon, indicating that they are beginning to lose their trade battle with the United States. Investors continue to take refuge in safe assets.

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

___MarketEvolution8 China is retaliating

Dow plummets 650 points as trade war with China intensifies.

American stocks fell sharply on Monday, August 5, as the trade war between the world’s two largest economies intensifies. China is retaliating.

The main indices have also fallen more than 5% from last month’s all-time highs.

It is a trade situation that is getting out of control as the side effects of increased tariff use multiply.

It seems that the policy of using tariffs as a tool to deal with legitimate disputes with the Chinese has failed miserably.

China, which has historically controlled its currency, allowed the yuan to fall against the dollar to its lowest level in more than a decade. The onshore yuan broke above 7 yuan to the dollar and traded at 7.05.

Trump later accused China of artificially manipulating its currency.

European equities close down

European equities fell on Monday, August 5, while the rapid escalation of U.S.-China trade tensions continues to frighten investors around the world.

The Stoxx 600 pan-European index traded 2.3% lower during the afternoon session, with all sectors and major exchanges in red.

At the end of the earnings season, HSBC unexpectedly announced the departure of CEO John Flint, saying the bank needed a change to face a challenging global environment. It does so despite a 16% increase in semiannual earnings. The bank’s London-listed shares lost 2% on Monday afternoon.

In Britain, growth in the services sector accelerated unexpectedly to a nine-month high in July. However, at 51.4, it is still well below its long-term average of 54.9.

___ContexGen_06ago

China allows its currency to fall to its lowest level in more than a decade

China let the yuan weaken below 7 yuan to the dollar. It is the lowest level in 11 years.

This maneuver seems to be provoked by the escalation of the trade war between the United States and China.

Fearful of the impact on global growth, investors are rushing to take refuge in safe assets, reaching the yen for a maximum of seven months.

The Chinese authorities, who were expected to defend the psychologically important level of 7 yuan per dollar, allowed the currency to break that ground and it seems a deliberate move by the Chinese to artificially weaken their currency.

Once the level is broken, risk appetite has been affected.

Pound marks new two-year lows against the Euro

The pound continues to lose ground against its rivals, due to growing fears of a Brexit without agreement. The British currency falls 0.66% and touches 0.92 pounds against the euro, its lowest exchange rate since September 2017. Against the dollar, it has returned to the $1.21 level, its worst rate since January 2017, which it reached last week.

After the victory of the Liberal Democrats in the Brecon and Radnorshire elections last week, the Conservative Party has been left with a majority of only one seat in parliament, making it difficult for the Tories to pass any Brexit-related decision. This increases uncertainty.

A battery of macro data is being released in the UK this week. From the PMI of services in July, to the growth data of the second quarter.

Gold hits six-year highs

All in search of gold.

The precious metal touches maximums of six years ago and it does it thanks to its nature of active refuge, in front of the increasing uncertainties tariffs by the commercial war between China and the USA.

Gold is benefiting from global concerns about macro growth and central banks.

Trade warfare is also a very important factor, especially given its escalating potential.

Other precious metals, such as silver and palladium, are quoted at this point with more timid rises.

The bitcoin is headed for its highs

The bitcoin rises about 9%, to prices above $ 11,500. This boom raises the total capitalization of the crypto currency market to $300 billion.

Analysts agree that it has finally been the bulls who have won the battle. It is only a matter of time before the recent highs of $14,000 are exceeded.

The rest of the most traded crypto currencies are also stained green, with increases of more than 7% in the ethereum or 13% in the litecoin.

It is a wave of purchases in the heat of geopolitical tensions and the latest escalation of the trade war between China and the United States.

Bitcoin is the asset of the week, despite uncertainty and risk.

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 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.

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___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.