July 26, 2018
Most major Asian markets weakened as U.S.-EU trade fears fade away
On Thursday, July 26, Asian equities fell, driven by a weakening of Chinese markets.
China's markets deepened their losses at the start of the session. Most sectors declined, including the financial, automotive, oil and real estate sectors. Japan's Nikkei 225 is down. In South Korea, the Kospi rose slightly. The manufacturing, technology and oil sectors were the main contributors to progress. The Australian S&P/ASX 200 suffered losses.
The Dow rises more than 150 points in a sudden move, after Trump allegedly has obtained concessions from the European Union to avoid a trade war. All American markets closed higher on Wednesday.
Trump said they have agreed to work together to achieve zero tariffs, plus zero non-tariff barriers and zero subsidies for industrial goods outside the automotive sector. Both the United States and the European Union have begun to establish a transatlantic trade truce. The negotiations still have a long way to go.
There was hope for an agreement with China in May, but since then both China and the United States have become entrenched in their positions. Trump takes advantage of popular support for protectionism and anti-Chinese sentiment. The trade threat could therefore worsen further, meaning that it risks slowing economic growth.
The dollar plummeted on Thursday and the euro rose as the U.S. and the European Union agreed to begin talks to lower tariffs, easing concerns about worsening global trade tensions.
President Trump has been talking a lot about controlling world oil prices. He spoke about Saudi Arabia's need to increase production. During a press conference with Russian President Vladimir Putin, he also raised the idea of regulating oil prices. Now there are good reasons for Trump to be concerned, as his administration's plan to sanction Iranian oil exports in November will create a significant decline in global oil supply.
Brent crude led the way in rising oil prices, extending profits for the third day in a row after Saudi Arabia suspended crude oil shipments through a strategic transport route in the Red Sea and data showed U.S. inventories fell to a three-and-a-half year low.
Gold prices rose sharply on Thursday, as the Dollar fell on the back of an agreement between the President of the United States and the President of the European Commission.
European markets are expected to open Thursday's session higher.
A very volatile day on Wednesday
U.S. futures and another big block of corporate profits.
A very volatile day on Wednesday, July 25th, when the Nasdaq reached record highs during the session to finish in lows.
Bad news from the price of crude oil, which stands at over 69 dollars a barrel, as weekly reserves have fallen further and tension in the Middle East has increased.
Another negative point in the U.S. has been the sale of new homes. It has fallen more than expected, following the negative trend of the whole year. The sale of second-hand homes was not strong either.
All this things in a context of higher interest rates and higher financing costs.
Fear of Donald Trump pulling the trigger on car tariffs. Negative session in the European market on Wednesday 25th July, where the clear protagonist has been related to the import tariffs on European cars in the United States.
If we look at the market from the inside we have that most of the supersectors are in negative, but with clear losers: Automotive and spare parts with a decrease of 3% and travel and leisure with a decrease of 1.2%.
Trump to propose to Juncker that the United States and the European Union repeal all tariffs
The European Union comes to Washington to negotiate a trade agreement.
Trump has said he has an idea for them: Both the US and the EU are abolishing all tariffs, restrictions and subsidies. That would finally be free and fair trade.
The president added that the United States is ready to adopt its proposal, but assumes that the European Union will not be ready to adopt it.
The question is.... Who started this whole tariff thing?
Finally there was a principle of agreement....
It's the results of General Motors that have unleashed a downward blow
General Motors, while the results have not been good, warns of the damage that tariffs are causing to steel and aluminium and reduces the prospects for this year.
This has boosted sales throughout the automotive sector and also in other manufacturing sectors.
Boeing has performed better than expected, but also has a bearish move.
White House strategies are already having a negative effect on American companies.
There is a renewed sense that technology is the refuge value. At the Globex, the Nasdaq is the best behaving.
Weekly oil reserves
Weekly oil reserves fall by 6.14 million barrels. This is a drop of more than the 2.33 expected.
Weekly reserves of distillates fall by 101,000 barrels and remain negative after 371,000 the previous week.
Weekly gasoline reserves are falling by 2.32 million barrels. This is much higher than the expected drop of 713,000.
This may lead to a bullish crude oil price.
German employers' confidence falls to a sixteen-month low
German business confidence fell in July to its lowest level since March 2017.
The companies were somewhat more satisfied with their current business situation, but slightly lowered their expectations.
According to the president of the IFO Institute, Clement Fuest, the German economy continues to expand, but at a slower pace.
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