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Market evolution

May 31, 2019

Asian equities show mixed tone as Chinese economic data disappoints

On Friday, May 31, the Asian stock market saw mixed results as China’s manufacturing data fell below analysts’ expectations.

Mainland Chinese equities rose at the end of the session. Moves in the region came as China’s manufacturing activity fell more than expected in May. The official Purchasing Managers’ Index (PMI) for manufacturing reached 49.4 in May. This figure does not meet analysts’ expectations of 49.9. PMI readings above 50 indicate expansion, while those below 50 indicate signal contraction.

The Nikkei 225 fell 0.82% at the end of the session. In Australia, the ASX 200 traded higher, while the South Korean Kospi rose 0.2%.

U.S. indices rose on Thursday, May 30, as the rapid drop in bond yields stabilized.

The Mexican peso hit a three-month low against the dollar after Washington unexpectedly announced that it would apply tariffs to all products from its southern neighbour. Trump says those tariffs will be maintained until the immigration problem with Mexico is resolved. The imposition of these tariffs is in principle prohibited by the current free trade agreement between Mexico and the United States. Nor is it contemplated within the framework of the WTO.

The yen, the safe haven currency, advanced while the Trump administration’s decision to increase its trade war with other countries shook the already fragile investor sentiment. The Yen gained 0.35% against the Dollar and also gained against the Euro and Australian Dollar.

The EUR remained stable. The EUR fell 0.62% this week, overburdened by concerns about Italy’s rising debt and the prospect that Trump will open a European front in its trade war. The pound remained largely unchanged.

Oil prices fell on Friday and are on their way to their biggest monthly decline since November. The U.S. president increased trade tensions by promising to apply tariffs to all Mexican products, raising fears about economic growth and oil demand.

Gold rose during Friday’s Asian session, heading toward its first monthly gain since January due to rising demand for safe-haven assets. The precious metal is making gains for the second week in a row.

European markets are expected to open lower on Friday.

The U.S. economy grew by 3.1%

U.S. markets rise as falling bond yields cease and recession fears ease.

U.S. indices rose on Thursday, May 30, as the rapid drop in bond yields stabilized.

The 10-year yield added 4 basis points to 2.27% after reaching its lowest level since September 2017. The fall in yields, coupled with a reversal of the yield curve, has raised fears of a possible slowdown in economic growth.

As for economic news, the second reading of the first quarter of US GDP showed that the economy grew by 3.1%, surpassing the 3% estimated by the Dow Jones.

European markets rise in value

European markets recovered on Thursday, May 30, but maintain their negative trend due to the escalation of the trade war between the United States and China.

The Euro Stoxx 600 pan-European index rose slightly. It was led by media stocks, with a rise of 1.8%, while the automotive sector remained almost unchanged.

British Finance Minister Philip Hammond supported those who oppose the possibility of a tough Brexit in the race to replace Prime Minister Theresa May.

German publisher Axel Springer shot up by 20% after it revealed that talks were underway with the KKR venture capital fund about a possible strategic investment.

Shares of Swedish radiation company Elekta continued to rise, adding another 19% to Wednesday’s earnings, thanks to good fourth-quarter results.

Gentle rebound on Wall Street after last session losses

Wall Street recorded a slight rebound after New York indices lost relevant technical support.

Investors fear that a prolonged trade war will damage global growth, which has reversed the yield curve on Treasuries for the second time this year.

At present, the yield on the 10-year US bond stands at 2.25%, while the yield on the 3-month bond stands at 2.35%.

It is a spread of 10 basis points indicating investors’ preference for short-term assets because of their distrust of medium- and long-term economic growth.

On the yield curve reversal, UBS believes that the mere fact that it has occurred will cause the economy to slow down. It should be remembered that the last seven times the curve was reversed, the economic outlook turned negative.

Russian disinformation campaigns focus on health

Russian efforts to sow discord before the 2020 elections seem to focus on scaremongering around health care issues.

Earlier this month, the New York Times reported that the U.S.-based television network Russia Today has been selling unverified stories claiming that 5G wireless technology may be linked to cancer, autism, Alzheimer’s and other health problems.

The most effective misinformation often plays on preconceived notions or fears that already exist in society, especially around health, safety and well-being.

Indeed, part of the recent popular reaction against big technology companies is the concern that they prioritise innovation and commercialisation over public safety.

China accuses U.S. of 'Economic Terrorism’

The trade crisis shows no sign of ending soon.

Tensions between Washington and Beijing rose sharply earlier this month after Trump accused China of not keeping its previous promises regarding structural changes in its economic practices.

According to Zhang, China is opposed to a trade war, but does not fear it. In fact, everyone loses in a trade war.

China’s deputy foreign minister, Zhang Hanhui, said China opposes the use of trade sanctions, tariffs and protectionism.

China has intensified its criticism of Washington since the United States mobilized this month to increase tariffs on Chinese imports and began attacks on Huawei Technologies Co.

In line with his image campaign, next week Xi Jinping will make a state visit to Russia, where he will meet Vladimir Putin and speak at an important investor forum in St. Petersburg.

Renault’s proposal is put to the test

Fiat Chrysler Automobiles NV’s proposal to merge with Renault SA is under close scrutiny in France.

The government, trade unions and some executives of the French car maker are wondering whether the plan undervalues the car maker Renault.

The question of whether jobs are endangered is also in the air.

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.

June 3, 2019

Asian markets appear mixed as trade fears deepen

Asian equities showed a mixed tone on Monday, June 3, amid growing concern about the state of world trade.

China’s stocks lost previous gains, falling at the end of the session. Chinese manufacturing activity was better than expected in May. The Caixin/Markit Factory Purchasing Managers’ Index was 50.2 against expectations of 50. PMI readings above 50 indicate expansion, while those below mark contraction.

In Japan, the Nikkei 225 fell 1.3% at the end of the session, while Fanuc saw its shares fall around 3%. In South Korea, Kospi was trading slightly higher with shares of Samsung Electronics and chip maker SK Hynix gaining more than 2% each. In Australia, the ASX 200 fell by 0.89% with almost all sectors trading lower.

The Dow fell 3% last week and recorded its sixth consecutive weekly loss. It is the longest weekly losing streak for the Dow since 2011. The S&P 500 and Nasdaq recorded their fourth consecutive weekly loss. The S&P 500 closed the month with a 6.6% drop. Volatility increased after worsening trade negotiations with China.

On Monday, the yen hit a four-month high against the dollar, while the Swiss franc rose as well. The U.S.‘s more aggressive stance fueled demand for safe-haven assets. Investors’ risk appetite has been held back by fears of a global growth slowdown that has helped fuel demand for government debt and triggered the sale of equities.

The Japanese yen recorded its biggest daily rise in more than two years, exceeding 1.2% during the session. The yen is considered a safe haven in times of geopolitical and financial turmoil, as Japan is the world’s largest creditor nation.

The euro gained on Friday and is its first gain in five sessions. The Australian dollar rose to a three-week high after the Chinese production reading.

U.S. and Mexican negotiators prepare for new trade talks after Trump promised to impose tariffs on all Mexican goods in the midst of an increasingly intense dispute over migration.

Oil prices fell more than 1% in Monday’s Asian session, extending losses above 3% since last Friday. On that day, oil markets accumulated their biggest declines in six months, amid stagnant demand and trade wars fuelled fears of a global economic slowdown.

During Monday’s Asian trading, gold reached record highs in more than two months, while investors took refuge in safe assets. Trade tensions between China and the United States are intensifying and Washington’s threat to apply tariffs to Mexico fuelled concerns. The precious metal rose above the key level of $1,316 for the first time since April 11.

European markets are expected to open downward on Monday.

Trump threatened Mexico with tariffs

Dow drops more than 350 points after Trump threatened Mexico with tariffs.

U.S. equities fell on Friday, May 31. Investors fear that President Trump’s surprising threat of tariffs on all imports from Mexico, in the midst of an increasingly intense trade war with China, could put the U.S. economy in danger of recession.

The White House added that tariffs against Mexico will persist if the immigration problem persists. It will increase even if Mexico does not take decisive action to reduce or eliminate it.

The Dow fell 3% last week and recorded its sixth consecutive weekly loss. It is the longest weekly loss streak for the Dow since 2011.

The S&P 500 and Nasdaq recorded their fourth consecutive weekly loss. The S&P 500 closed the month with a 6.6% drop. Volatility increased after worsening trade negotiations with China.

European markets close down after Trump stokes recession fears

European shares were down on Friday, May 31, after the U.S. president announced plans to impose a 5% tariff on all Mexican imports beginning June 10.

The Stoxx 600 pan-European index ended with a 0.8% drop after reaching its lowest point since 19 February. The automotive sector led the losses with a 2% drop. All but two sectors traded red. Utilities shares were the best performers.

Italy reported a GDP of -0.1% in the fourth quarter and 0% in the year. Italian Prime Minister Guiseppe Conte said the government’s growth forecast for 2019 remains credible, despite a downward revision in the first quarter.

The Bank of Italy warned the anti-system government of Rome against widening the country’s deficit, suggesting that the 2019 public debt could increase more than expected.

Morgan Stanley reduces Apple’s target price

Morgan Stanley analyst Katy Huberty lowered her target price at Apple in a note distributed to investors.

The company reduced its estimates from $240 to $231. However, it has not changed its sales or profit forecasts. The rebate is based on the performance of other similar companies.

Apple has seen six target price cuts in May, while fears of trade war in China are dragging stocks down.

Apple is vulnerable to trade war between the United States and China because the Chinese market (including Taiwan and Hong Kong) is its third largest market.

By manufacturing in the Asian country, it is also vulnerable to the current set of proposed additional tariffs.

Facebook is working on products that will be controlled by voice

Facebook CEO Mark Zuckerberg said the company is working on a number of projects that could benefit from an Artificial Intelligence voice assistant.

According to Zuckerberg, more and more products will be released in the coming years where voice is an important interface.
The information comes after a CNBC report that said Facebook was building its voice assistant to rival Amazon’s Alexa, Apple’s Siri and Google’s voice assistant.

Strong bitcoin sales after reaching new annual highs

The most traded of cryptographic currencies has fallen prey to sales, after hitting a new annual high of over $9,000. However, it has subsequently fallen by 5%.

The sharp fall has occurred in just over 12 hours and has sent the bitcoin close to $8,300.

The gloomy outlook does not put an end to the optimism of analysts, who continue to aim for $10,000 as a target after the recent rises.

So far this year, the most traded encryption asset has climbed 150%. This figure rises to more than 170% from last December’s lows.

Retaliation in North Korea

North Korea executed Kim Hyok Chol and foreign ministry officials who conducted negotiations at the second U.S.-North Korea summit in February.

Kim Yong Chol was a senior official who had been the counterpart of U.S. Secretary of State Mike Pompeo in the run-up to the summit between President Donald Trump and North Korean leader Kim Jong Un in Hanoi.

He is said to have been subjected to forced labour and ideological education. He was forced to work in Jagang province in a political prison camp.

Kim Hyok Chol was finally investigated and executed and accused of spying for the United States.

It is also said that Shin Hye Yong, interpreter of Kim Jong Un at the Hanoi meeting, was sent to a political prison camp for undermining Kim Jong Un’s authority by making a critical misinterpretation.

It is the first time since the execution of Jang Song Thaek Kim Jong Un’s uncle in December 2013 that purges are known in the Asian country.

It is believed that the North Korean leader is carrying out a massive cleaning among his collaborators, to divert attention away from internal upheavals.

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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June 4, 2019

Chinese Markets fall on continued trade tensions and RBA cuts interest rates

Chinese equities fell on Tuesday, June 4, while other Asian markets traded cautiously amid global trade tensions.

The Nikkei 225 index dropped slightly, with Softbank Group shares losing more than 3%. In South Korea, the Kospi was flat.

In Australia, the ASX 200 rose slightly after the Reserve Bank of Australia (RBA) announced that it was cutting its interest rate by 25 basis points to 1.25%. The decision to lower interest rates will help the Australian economy move forward. The RBA will likely have to make more than two rate cuts to bring unemployment back down, wage growth higher and inflation closer to its target.

The Dow has fallen for six consecutive weeks, for the first time in eight years, while the S&P 500 and Nasdaq have recorded four consecutive weekly falls. Tariff tensions with China and Mexico, as well as economic uncertainty in the U.S., are weighing negatively on American markets.

The U.S. currency was affected by the fall in U.S. Treasury yields and the anticipation of an upcoming Federal Reserve interest rate cut.

The U.S. dollar fell to its lowest level against the yen since January 10. The dollar is also falling against currencies such as the euro. Participants have found an incentive to finally hedge short positions in the euro following the sharp drop in U.S. Treasury yields. The dollar has been a refuge recently, but its strength is waning as the unexpected pace of the fall in US yields has become relevant.

The EUR rose 0.1% to its highest level since May 13. The euro has benefited from the dollar’s weakness, but analysts remain cautious about its long-term outlook. Given the euro zone’s close ties to China’s economy, the euro is one of the currencies hardest hit by China’s economic recession.

The Australian dollar remained stable, hitting a three-week high the day before and after the dollar fell. The Australian dollar did not react to April’s worse-than-expected domestic sales data. For its part, the pound fell to its five-month low, negatively affected by the prospect that Britain could elect a Eurosceptic prime minister that would lead to tough positions on Brexit.

Oil prices were put under pressure on Tuesday by an economic slowdown that has begun to affect fuel consumption. However, there continues to be support from Saudi Arabia in the sense that it expects a consensus from producers on expanding supply cuts.

Gold remained stable during Tuesday’s Asian session, at a three-month high. Concern about the global slowdown was fuelled by trade disputes and expectations of an interest rate cut in the United States. As a result, investors are looking for safe haven assets.

European markets are expected to open up on Tuesday.

Mexican officials will begin talks on tariffs

The month of June seems to start in the same way as the previous one ended.

The Dow has fallen for six consecutive weeks, for the first time in eight years, while the S&P 500 and Nasdaq have recorded four consecutive weekly falls. Tariff tensions with China and Mexico, as well as economic uncertainty in the U.S., are weighing negatively on U.S. markets.

Goldman Sachs sees increased risks of escalating U.S. trade disputes with China and Mexico. There is now a 60% chance that the U.S. will put a new 10% tariff on the last $300 billion of Chinese imports. There is also a 70% chance that Trump will impose a 5% tariff on Mexican products.

Senior U.S. and Mexican officials will begin talks on tariffs and border security. Mexico is sending a large delegation to discuss about the border with the U.S. The problem is that Mexico has so far limited itself to offering promises and never facts.

European markets close tightly after Wall Street wipes out losses

On Monday, June 3, European stock markets were affected by the current state of world trade. However, the initial heavy losses were erased during the afternoon session.

The Stoxx 600 pan-European index ended with a 0.31% rise. Stocks of chemical and commodity manufacturers performed well, while banks, travel, leisure and technology struggled.

Trump arrived in the UK as part of a three-day state visit. The visit received a mixed response. Trump marked his arrival with insults to the Mayor of London, Sadiq Khan. Before his arrival, opposition leader Jeremy Corbyn also criticised the American president for his unacceptable interference in UK political affairs, after Trump’s comments seemed to endorse Boris Johnson as the next prime minister.

UK manufacturing activity entered contraction territory in May, with Brexit still weighing heavily. Survey data also showed that some British producers have diverted supply chains outside the UK.

On the other hand, the state of European politics remains in the spotlight, after it became known this weekend that Andrea Nahles would resign as leader of the German social democratic party.

A dozen EU countries will ask for more capital cushion to the banks in 2019

A dozen countries in the European Union and the European Economic Area (Norway and Iceland) will activate or raise the anticyclical capital cushion by the end of 2019.

The anticyclical capital buffer is a macroprudential tool available to national supervisors that emerged in the wake of the 2008 financial crisis. It is combined with the rest of the minimum capital levels of the supervisory review and assessment process.

Its objective is to strengthen the solvency of banks in order to be able to absorb potential credit losses that occur in recessive phases of the cycle. This will minimise the negative impact of a contraction in the flow of bank financing in bad times.

According to data from the European Systemic Risk Board, eight countries currently have an anti-cyclical cushion of over 0%. Seven of them plan to raise it before the end of the year and four are planning to activate it.

Trump attacks Sadiq Khan who is the Mayor of London at the beginning of his official trip to the United Kingdom

In an opinion piece published before the visit of the U.S. president, Khan compared Trump to the fascists who polluted Europe in the 20th century.

‘He is a loser who should focus on crime in London and not so much on the president of the United States,’ Trump said of the mayor of London.

He said Khan has done a terrible job and has gone against the president of the United States, who is the UK’s most important ally.

Google has few political allies and a long history of trust complaints

News that the U.S. Department of Justice is preparing an investigation into Alphabet’s Google for antitrust violations.

Since the news broke, many have compared the Google investigation to another federal investigation, lasting years, into Microsoft two decades ago.

This time the process is likely to move much faster than the Microsoft case.

DOJ’s antitrust investigation with Microsoft began in 1992 and went through several stages before DOJ sued Microsoft in 1998.

In 2000, a district court ordered Microsoft to split into two companies, but the ruling was overturned on appeal.

Finally, Microsoft and the DOJ reached an agreement in 2001 and the government imposed several rules that the company had to follow for years.

Trump administration says it will negotiate with Iran unconditionally

In the second major shift in US policy towards Iran in recent days.

Secretary of State Mike Pompeo said the Trump administration was ready to negotiate with Iran’s leaders without preconditions.

The statement followed President Trump’s comment that he was ready to talk to Iranian leaders and that he was not seeking regime change. This position nullifies a long-term goal of his national security adviser.

Pompeo’s statement has varied from his previous position. Now he no longer threatens that the United States would not lift sanctions against Iran unless it met a dozen radical demands.

Of course, Iran’s leaders considered those demands unacceptable.

The less combative language does not change the fact that the Trump Administration has tightened economic sanctions against Iran, 1,500 additional troops have been sent to the Persian Gulf and military plans have been reviewed.

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.

June 5, 2019

Asian stocks gain on strong Wall Street gains

Asian equities gained ground on Wednesday, June 5, after a rally on Wall Street.

Mainland Chinese equities rose at the end of the session. The Nikkei 225 rose 1.82% with Fanuc appreciating more than 2.5%. Australia’s ASX 200 also rose 0.5% with most sectors trading higher. The Australian economy grew less than expected in the first quarter. Gross domestic product grew 0.4% in the first three months of the year.

US equities rose on Tuesday, June 4, after Federal Reserve Chairman Jerome Powell indicated that the central bank was willing to relax monetary policy to save the economy.

The dollar hit a seven-week low after the Fed insinuated a possible interest rate cut. The dollar will likely lose some of its strength if interest rates in the U.S. are cut. Japanese interest rates are already at such a low level that it is unlikely that they can be lowered further.

Interest rate cuts by some central banks in recent weeks could signal the beginning of a cycle of global monetary easing, to avoid a more pronounced economic slowdown.

Oil prices resumed their decline on Wednesday. They were dragged along by a surprising rise in inventories in the US. Crude oil inventories rose by 3.5 million barrels in the week of May 31 to 478 million. Analysts expected a decrease of 849,000 barrels. The president of the Russian state oil company Rosneft questions the agreement with OPEC to retain the supply, this puts in doubt that an agreement will be reached to continue cutting production.

During Wednesday’s Asian trading session, gold rose sharply and remained at three-month highs, while the dollar weakened on the possibility of an interest rate cut by the Federal Reserve.

European markets are expected to open up on Wednesday.

Federal Reserve anticipates it will help

Dow Jones rises 400 points as Federal Reserve anticipates it will help the economy if needed.

U.S. equities rose on Tuesday, June 4, after Federal Reserve Chairman Jerome Powell indicated that the central bank was willing to relax monetary policy to save the economy.

Powell said the central bank will act appropriately to sustain the expansion. However, he said the Federal Reserve does not know how or when world trade problems will be resolved.

These comments come amid rising expectations of a Federal Reserve interest rate cut. The probability of an interest rate cut in September is estimated at 90%. Expectations of a second rate cut in December are also above 80%.

European markets close up with the automotive sector rising by 3.2%

European equities rebounded on Tuesday, June 4, amid a recovery in investor sentiment around the world. Automotive and spare parts became the best sector, with a rise of 3.2%.

The Stoxx 600 pan-European index rose slightly, while the technology index was one of the few sectors in the red.

Investor sentiment began to recover on Tuesday when the US president met with UK business leaders and promised Theresa May a very substantial trade deal.

Eurozone inflation fell more than expected last month, adding to concerns about weak pressure on prices and reinforcing arguments for further stimulus from the European Central Bank. Inflation in the 19 countries that share the euro fell to 1.2% in May, below expectations of 1.3%.

Trump promises the UK a very good trade deal

The president of the United States says that the trade flow with the United Kingdom will multiply after Brexit.

Donald Trump has promised a huge trade deal once the British have left the European Union and cut off their relations with the bloc. He did so at a press conference with Prime Minister Theresa May during his official trip to England.

Theresa May has said that U.S. trade with her country is currently worth £190 billion.

Trump’s words support all the supporters of a Brexit without agreement, who have always regarded the United States as the ideal partner that could compensate for the loss of trade relations with Europe.

Eurozone unemployment dDrops a tenth in April

The unemployment rate in the euro area declined by one tenth in April in comparison with March and stood at 7.6%. In the EU as a whole it remained stable at 6.4% during the fourth month of the year.

The figure for the nineteen countries sharing the single currency is the lowest since August 2008, while the figure for the Twenty-eight is the lowest since January 2000.

The annual inflation rate in the euro area was 1.2% in May. It is half a percentage point below the previous month’s price increase and the smallest increase since April 2018.

Energy recorded a year-on-year increase of 3.8% in May, compared with 5.3% in April. Food, alcohol and tobacco rose by 1.6%. Services rose by 1.1%.

Trade escalation is not the only risk facing the U.S. economy

According to Mary Daly, president and CEO of the Federal Reserve Bank of San Francisco, commercial uncertainty is very present in the minds of investors and businesses.

But trade disputes are not the only risk facing the U.S. economy.

The circumstances surrounding the UK’s withdrawal from the European Union have also affected economic activity. In addition, the Federal Reserve can afford to wait before making its next monetary policy move. Patience is the right path for central banks right now, but possible interest rate cuts could affect economic activity.

The U.S. government is threatening big technology and the markets have just realized

Politicians and technology executives have spent more than a year debating the proper role of regulators in the technology industry.

Monday was the day when action was taken and markets punished great technology.

Investors are worried about Facebook and Google’s father, Alphabet, as their shares fall more than 6%. Amazon fell more than 4.6% and Apple fell 1%.

In total, they lost about $130 billion in market value and led a 1.6% drop in the Nasdaq Composite. It represents a decline of more than 10% from the all-time high reached in April.

The Federal Trade Commission has taken over Amazon and Facebook by examining how those companies could be harming competition.

Foreign governments are also realizing the dangers of allowing a few technology titans to have such a huge influence on consumers’ daily lives.

Right now, trying to establish greater controls, new regulations are being raised every day.

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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June 6, 2019

Asian Markets mixed waiting for Federal Reserve to cut interest rates

Asia-Pacific markets were mixed on Thursday, June 6, with Australia, New Zealand and Japan on the rise. China’s markets struggled to end up positive, while South Korea remained closed for a holiday.

In China, the Shanghai composite fell by 0.48%. The Nikkei 225 in Japan rose 0.27%. Australia’s ASX 200 rose 0.61%, with most sectors trading higher. The financial sub-index rose 0.69%.

U.S. equities traded higher on Wednesday, June 5, taking advantage of strong gains from the previous session. The markets consolidated slightly due to the Fed’s forecast of interest rate cuts and the news that Donald Trump wants to reach an agreement with Mexico. For now, the U.S. and Mexico failed to reach an agreement on immigration during Wednesday’s meeting, a few days before 5% tariffs on all Mexican imports get underway.

On Wednesday, the U.S. dollar rose as the Institute for Supply Management (ISM) showed signs that U.S. service sector activity rose strongly in May. The Japanese yen rose against the U.S. dollar on Thursday, as fears over the U.S.-Mexico talks. Concerns increase appetite for safe-haven currencies.

The focus of Thursday’s session will be the European Central Bank and how controversial President Draghi could be. The European Central Bank makes a new monetary policy decision on Thursday. The ECB will try to give a boost to the weakened Eurozone and may even pave the way for more stimulus to the economy by the end of this year.

Oil prices fell on Wednesday to their lowest level since January. The declines come on the back of an unexpected increase in U.S. crude oil reserves. Reserves rose by 3.5 million barrels, while analysts expected them to fall by 849,000 barrels.

Gold reached a 15-week high, as fears about global trade and expectations of an interest rate cut in the U.S. prompted investors to take refuge in gold bullion. Powell’s speech was a good support for gold. The market was weighing the possibility of two rate cuts this year, but now the number of cuts is likely to increase.

European markets are expected to open mixed on Thursday.

S&P 500 rises with rate cut announcement

U.S. equities traded higher on Wednesday, June 5, taking advantage of strong gains from the previous session.

Technology stocks rose 1%, while the utilities and real estate sectors were boosted by lower interest rates. Apple led technology gains, with a 1.6% increase after CEO Tim Cook said the company had not been China’s target amid rising trade tensions.

Salesforce, a specialist in cloud software, also contributed to the gains in the technology sector. Its shares rose 3% thanks to higher-than-expected earnings.

Federal Reserve Chairman Jerome Powell said on Tuesday that the central bank will be watching the economy and will do whatever is necessary to sustain the expansion. Powell, however, pointed out that the central bank could not determine when and how world trade problems would be resolved. The Federal Reserve is being very accommodative and looks like it will continue to move in that direction.

According to ADP and Moody’s Analytics data released Wednesday, private jobs rose only 27,000 in May. Economists surveyed expected an increase of 173,000 new jobs.

The 10-year Treasury yield traded at 2.10%, while the 2-year rate reached its lowest level since December 2017.

European shares are closing upwards for the most part

European shares closed up on Wednesday 5 June, but the upturn lost some strength after it became known that the European Union has opened a sanctioning case against Italy for violating tax rules.

The Stoxx 600 pan-European index closed with a slight rise, while the shares of utilities rose by almost 1.3%. Banks were one of the few sectors to fall in the red.

Italy’s FTSE MIB was one of the worst performers. The Italian stock market plummeted by 0.35%. Their bond yields rose and bank stocks fell. The country’s banking sector fell by almost 2%, while 10-year bond yields rose to 2.6%.

Eurozone composite and services CPI figures showed that the UK economy was on the verge of stagnation due to uncertainty over the Brexit. Germany’s services sector provided a growth boost to a recessionary economy. French business activity strengthened in May.

Putin and Xi praise unprecedented ties between their two countries

Russia and China seem intent on strengthening their alliance, and fostering deeper cooperation, in the face of growing U.S. political and economic hostility.

The attempt to strengthen bilateral ties continues this week, as Chinese President Xi Jinping is in Russia for the start of a three-day state visit and high-level talks with Putin.

‘We have managed to take our relationship to the highest level in our history,’ Xi said. ‘We will continue to improve our ties and we are ready to go hand in hand with Russia’.

On Wednesday evening, Putin and Xi will attend an event to commemorate the 70th anniversary of diplomatic relations between the two countries.

Trade tensions have had a significant impact on China

Increasing trade tensions with the United States are beginning to affect China’s growth.

The International Monetary Fund reduced its 2019 growth forecast for China to 6.2%.

Trade tensions have had a significant impact, but so far it has been contained.

Morgan Stanley economists also reduced their growth forecasts for China to 6.4%.

Tariffs on Mexican products may not be necessary

White House trade adviser Peter Navarro said Wednesday that the U.S. plan to impose tariffs on Mexican products might not have to go into effect.

This offers a ray of hope to both Mexico and U.S. companies.

Frustrated by the lack of progress on a central issue of his election campaign, President Donald Trump unexpectedly stated last week that he would take a tougher stance on illegal immigration.

Mexico could face 5% tariffs on all its exports to the United States, rising to 25% over the course of the year, if it does not put more means in place to control its emigration.

A large group of Mexican officials will try to persuade the White House not to apply additional tariffs. They will hold a round of talks hosted by U.S. Vice President Mike Pence.

Digital transformation is driving growth

Cloud software giant Salesforce is leveraging the massive digital transformation across Corporate America and in government.

Salesforce is the number one in customer relationship management, which is the fastest growing part of enterprise software.

The firm’s customers include Dell, Peloton, Southwest Airlines, and several federal agencies.

The U.S. government is going through a huge digital transformation, and Salesforce has been able to provide many of those agencies with the fast and successful transformation they need.

Salesforce shares gained nearly 4% during Tuesday’s session.

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.

June 7, 2019

Asian Stocks rise on European Central Bank interest rate announcement

Shares in Asia traded higher on Friday, June 7, following positive developments in the U.S.-Mexico negotiations. Investors would also digest recent comments from major central banks.

The Nikkei 225 in Japan rose slightly, with robot manufacturer Fanuc gaining 1.39%. In Australia, the ASX 200 also rose, with most sectors on the rise. In South Korea, the Kospi rose slightly.

American equities showed a positive tone on Thursday, June 6, while investors anticipate that the United States and Mexico are approaching a resolution on immigration issues that would delay additional tariffs to Mexico.

The U.S. dollar was hurt by forecasted U.S. employment data, and the euro was able to move higher. The euro was also supported by the appearance of Mario Draghi after the ECB meeting. On Friday, the release of the U.S. Non-Farm Payrolls is expected with great interest. The slowdown in the U.S. labour market was evident in Wednesday’s ADP National Employment Report.

Risk factors such as the global trade war and Brexit are dragging the eurozone economy lower. With this, the ECB announced that it would delay its first post-crisis interest rate hike at least until mid next year, while announcing generous conditions for a new batch of long-term loans to banks. However, the market expected signs of interest rate cuts, so eurozone bond yields rose and the euro appreciated.

Oil prices rose by more than 1% during Friday’s Asian session, moving away from the five-month lows recorded earlier in the week. Signs follow that OPEC, and other producers, could widen their supply cuts.

Gold was down on Friday, but ends its best week this year. In the long term, it is supported by the intensification of global trade conflicts. In the short term, the hope that the United States will not finally impose tariffs on Mexico hurts gold and injecting optimism into equities. Investors are now awaiting the U.S. employment report, which will be released this Friday.

European markets are expected to open up on Friday.

There was a very good debate

Dow recovers 180 points and climbs for the fourth consecutive session.

U.S. stocks rose on Thursday, June 6, while investors anticipate that the United States and Mexico are approaching a resolution on immigration issues that would delay additional tariffs to Mexico.

Talks resumed Thursday afternoon after negotiators failed to reach an agreement Wednesday. Martha Barcena Coqui, Mexico’s ambassador to the United States, said there was a very good debate in the negotiations.

The United States had asked Mexico to hold Central American asylum seekers and to require migrants without proper documentation to remain in Mexico.

The shares of the companies that have the most to lose, if tariffs are imposed on Mexico, reduced their losses to the new holders. The shares of Ford, GM and Kansas City Southern took a big leap throughout the session, although at the end of the day they ended in negative.

European markets close mixed after the ECB is prudent

European stock markets closed mixed on Thursday, June 6, as the European Central Bank revised its forecasts at its last meeting.

The pan-European Stoxx 600 provisionally closed just below the flat line, with all sectors and major exchanges in mixed territory.

The ECB announced that it would delay its first post-crisis interest rate hike at least until the middle of next year, while announcing generous conditions for a new batch of long-term loans to banks.

The ECB said it would maintain its official interest rate at the current -0.4% and continue to reinvest in bonds at maturity, in a debt portfolio that is already €2.6 trillion. The euro had strong movements, reaching highs after the news.

According to Mario Draghi, the prolonged presence of uncertainties related to geopolitical factors, the growing threat of protectionism and vulnerabilities in emerging markets is leaving its mark on economic sentiment.

Federal Reserve Chairman is now the most important event for the market

The Dow Jones Industrial Average rose more than 500 points on Tuesday, and continued to rise on Wednesday, after Federal Reserve Chairman Jerome Powell opened the door to a rate cut that traders have been waiting for because of fears that the economy is slowing.

‘We will act in the proper way to sustain the expansion,’ was all Powell said, but that was enough to make the market jump.

Powell’s assurance that the Fed will act appropriately to sustain the expansion was confirmation that not only is there a rate cut on the table, but maybe more.

The economy is slowing down

The disappointing ADP payroll data released on Wednesday may be overvalued.

Economists say the monthly ADP report does not always align with the government’s employment report. So far, expectations for Friday’s report have not been lowered.

However, some warn that next Friday’s forecast of 185,000 new jobs may be too high.

Weak ADP data in May, showing only 27,000 new jobs in the private sector, could have been affected by the sharp drop in unemployment claims in April.

Economists say the U.S. labour market is weakening and will be worse if President Trump goes ahead with tariffs.

Why tariff escalation as a political weapon is so dangerous

President Donald Trump prides himself on his bold negotiating tactics. However, his threat against Mexico for failing to take action against emigration turns a powerful trade tool into a political weapon that could prove counterproductive.

Trump has said he is likely to go ahead with tariffs against his second largest trading partner. This could create an atmosphere of mistrust of U.S. policy.

The initial reaction on Wall Street was a sale on the stock market and a flight to bond security.

The 2020 elections are already infecting financial markets and Trump is playing a dangerous game with anti-growth policies while the yield curve is reversed.

Income inequality is capturing the economic debate

The growing gap between the rich and all others has fuelled unrest around the world and is becoming especially pronounced in the United States.

The causes could be varied…

The digital revolution is creating enormous wealth for those who have the capacity to take advantage of it, while eliminating what economists call middle-skilled jobs.

Globalization is also an influential factor, as competition from emerging economies such as China, combined with the reduction of trade barriers, reduces the prospects of the unskilled.

Then there is the rise of companies like Apple and Amazon, which attract global revenues, which means bigger rewards for the executives who lead them and a bigger pay gap with the average worker.

The decline in organized labour is reducing the power to negotiate higher wages and benefits.

Finally, increased wealth confers political power, which has allowed the better-off to reward themselves through policies that benefit them.

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.

June 10, 2019

Chinese Markets rise on release of higher than expected trade surplus in may

Shares in Asia rose on Monday, June 10, after the U.S. president announced last week that no tariffs will be applied to Mexican products.

China’s shares rose during the last part of the session. China’s official May data showed that the country’s exports exceeded expectations and imports did not meet expectations, leaving a total trade surplus of $41.65 billion dollars for the month of May.

Australia’s markets remained closed on Mondays for holidays. The Nikkei 225 rose 1.03% at the end of the session. South Korean Kospi also rose 0.92%, with shares of chipmaker SK Hynix gaining more than 1.5%. The automotive sector was on the rise after news that Trump had withdrawn its tariff threat on Mexican products. Kia Motors of South Korea rose to 4%, while Toyota of Japan recovered 1.56% and Nissan rose 0.96%. Mexico is used as a production base by many Japanese automakers.

The Dow jumped 260 points on Friday, June 7, after the jobs report stimulates hopes of interest rate cuts. The weak jobs figure gives the Federal Reserve a clear relaxation strategy for the month of July.

The Mexican peso rose against the dollar on Monday, after the United States and Mexico closed an immigration agreement late last week to avoid a tariff war. This provided much-needed relief to fragile market expectations.

Against the Japanese yen, the dollar rose slightly. The yen has been rising in May as the global trade outlook deteriorated. This currency tends to benefit during periods of geopolitical or financial tensions, as Japan is the world’s largest creditor nation.

Oil prices rose during Monday’s Asian session after Saudi Arabia said it is likely that the OPEC Producers’ Club and Russia will continue to maintain supply containment.

Gold price fell, from a maximum of 14 months, after an agreement between the United States and Mexico to avoid a tariff war. This agreement reduces the demand for safe-haven assets for the time being.

European markets are expected to open mixed on Monday.

Jobs report stimulates interest rate cuts

Dow jumps 260 points after best week since November.

The Dow jumps 260 points on Friday, June 7, after the jobs report stimulates hopes of interest rate cuts.
The weak jobs figure gives the Fed a clear relaxation strategy for July.

The bad employment data should encourage investors to increase selling positions. However, this same data makes possible a lowering of interest rates that would push the stock markets higher.

Market expectations for a Federal Reserve interest rate cut in June rose to 27.5% from 16.7%.

Treasury yields generally fell. The 10-year benchmark rate fell to its lowest level since 2017. The dollar weakened against a basket of major currencies.

European shares close tightly

European equities closed higher on Friday, June 7, as disappointing U.S. Non-Farm Payrolls led to speculation that the Federal Reserve will cut interest rates.

The Stoxx 600 pan-European index closed provisionally with a rise of almost 0.9%, while technology stocks led the gains with a rise of close to 2%, as all sectors were in positive territory.

Another central bank that remained in the spotlight was the European Central Bank. On Thursday, the ECB decided to postpone its first post-crisis interest rate hike while raising its inflation expectations.

Disappointing american employment data

The Dow jumps 200 points after disappointing employment data increases the chances of a Federal Reserve interest rate cut.

The U.S. economy added 75,000 new jobs in May, marking the second consecutive month of monthly job growth below 100,000. Economists surveyed expected an increase of 180,000 jobs. Wage growth also slowed.

The weak number of jobs gives the Federal Reserve a free hand to lower rates in July. Market expectations for a cut in interest rates rose to 27.5% after the release of the data.

The Dow Jones Industrial Average traded 200 points higher, led by Microsoft and Apple earnings. The S&P 500 rose, with the technology sector outperforming the others. The Nasdaq Composite gained 1.1%.

Theresa May ends her term of office

Friday 7 June was Theresa May’s last official day as Prime Minister of the United Kingdom.

She resigned in May after being put under heavy pressure by failed efforts to move Brexit forward.

She will remain in office until a replacement is chosen.

A trade agreement is what the oil market needs

The trade war between the U.S. and China is very much to blame for the fact that oil continues to fall.

Upward sentiment around crude oil has been damaged by fears of a global growth halt.

What is the driving force behind the demand for oil? It’s China.

There is currently a real fear of a drop in demand for oil from that country. If there is no sign of Donald Trump and Xi Jinping approaching, there will continue to be a bearish tone in oil prices.

Apple could lose nearly one-third of its value if China enters the full commercial war

Apple shares are rising, after CEO Tim Cook said the company would escape any escalation in the trade war.

China is threatening new moves and one of them would be to ban iPhones. If this were to happen, Apple’s shares could fall to $130.

Such a significant downward movement would represent a 29% decline. Apple has not been at that level since February 2017.

However, the probability that China will go against Apple is not very credible, because it would also go against its own workers. The situation is worrying but unlikely.

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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June 11, 2019

Markets rise in China despite threat of tariffs

Asia-Pacific stocks rose on Tuesday, June 11, following comments by the U.S. president about his country’s trade war against China. Trump threatened to impose new tariffs if he does not agree with the Chinese president at the G20 meeting.

Shares in mainland China rose at the end of the session. The Japanese Nikkei 225 rose slightly. South Korean Kospi traded 0.3% higher, with LG Electronics shares rising more than 5%. In Australia, markets traded higher after a holiday. The ASX 200 rose by 1.24%, with most sectors in positive territory.

The United States has reached an agreement with Mexico, alleviating some of the concerns that have weighed on the markets since early May. During Tuesday’s trading session, the dollar remained stable against most currencies, but risk appetite remained under control after the U.S. president repeated his tariff threats against China.

Over the past year, financial markets have been affected by fears of escalating trade tensions between the world’s two largest economies, fuelling concerns about global growth prospects. Risk appetite remained moderate as investors await confirmation of a possible meeting between Trump and the Chinese president at the Group of 20 summit of later this month.

The Chinese yuan rose 0.2% to 6.9310 yuan per dollar. The Chinese currency thus reverses previous declines. The Australian dollar hit a week-long low against the U.S. dollar, in line with the yuan’s movement. The Australian dollar is often seen as an indicator of China’s growth, with an export-dependent Australian economy sending large volumes of commodities to the Asian nation.

Last week, the euro rose 1.5% against the dollar after the European Central Bank said interest rates would remain at current levels for the time being.

Oil prices stabilized on Tuesday, as the OPEC producer group and its allies are expected to contain supply to prevent prices from falling. They will do so amid a broad economic slowdown that has begun to affect the growth of fuel demand. Russia said Monday it could support an extension of the supply cuts, which have been in place since January, warning that oil prices could fall by as much as $30 a barrel if producers supply too much crude.

Gold remained stable on Tuesday, after recording its biggest daily percentage decline in the last two months in the previous session. Washington’s new trade threats against China overshadowed investor optimism, which had been driven by the U.S.-Mexico agreement.

European markets are expected to open up on Tuesday.

U.S. and Mexico reach an agreement

Dow rises 150 points after U.S. and Mexico reach an agreement.

U.S. equities rose on Monday, June 10, extending last week’s gains.

The U.S. has reached an agreement with Mexico, alleviating some of the concerns that have weighed on the markets since early May. Trump said he has full confidence that Mexico will crack down on migration from Central America.

The shares of GM and Ford rose 1.8% and 2.6% respectively. These are two companies that had much to lose in a commercial battle with Mexico.

European equities tend to rise as trade tensions ease

European markets were cautiously priced up on Monday, June 10, after the U.S. president announced that proposed tariffs on Mexican imports would be suspended indefinitely.

The Stoxx 600 pan-European index rose slightly, while basic resources led the gains with a 1.2% increase, and while utilities fell by 0.7%.

German markets closed for holidays.

G-20 leaders have said that trade and geopolitical tensions have intensified, increasing risks to global growth.

The UK has also reached a free trade agreement with South Korea, which will come into effect as soon as the UK leaves the EU.

Meanwhile, the Conservative candidates began campaigns to replace Theresa May, who resigned as leader of her party on Friday but will remain prime minister until her successor is appointed.

Data released on Monday showed that the British economy contracted sharply in April. There has been a big drop in car production and manufacturers do not seem to adapt well to the country’s exit from the European Union.

Chinese exports improve despite trade war

Chinese exports recovered markedly in May and increased by 7.7% year-on-year. They do so despite the trade dispute between Washington and Beijing.

According to analysts’ forecasts, the upward trend will reverse during the third quarter of this year.

Imports fell by 2.5% in contrast to the 10.3% rise in the previous month, which has raised concerns among experts.

Chinese exports to the United States will soon suffer from tariffs, to which must be added the feared drop in imports due to poor domestic demand.

G20 countries forecast recovery in global growth

The G20 countries have noted that global growth is stabilizing. A moderate recovery is expected from the second half of 2019 and they have agreed to continue working towards fairer, more sustainable and modern international taxation.

The meeting served to prepare the summit of Heads of State and Government to be held on 28 and 29 June in Osaka. Japan is the country holding the presidency of the G20 for 2019.

The Ministers of Economy and Finance and the Governors of the central banks of the member states analysed the situation of the global economy and discussed the world economic situation, international taxation, global imbalances, financial stability, as well as financing for development, investment in infrastructure and demographic changes.

The G20 countries have reaffirmed their commitment to use all economic policy instruments for strong, sustainable, balanced and inclusive growth.

G20 proposes ‘digital tax’ to Internet giants

It would be a tax aimed at digital giants such as Amazon, Google or Facebook and seems to be closer to materializing globally.

The ambitious initiative, also known as ‘digital rate’ or ‘Google rate’ in the European Union, has taken off in the group of the twenty most industrialised and emerging countries.

The measure will have two fundamental pillars: one based on ending taxation according to where companies have physical presence, and the second aimed at avoiding tax competition between nations.

The tax burden of the new system will be decided according to the significant economic presence of companies in each country, the volume of data and other intangible assets such as the number of users.

Japan revises first quarter GDP rise upwards

The Japanese government has revised upwards the gross domestic product for the January-March quarter, which grew by 2.2% compared to the same period last year.

The gross domestic product of the world’s third largest economy, compared to the previous three months, expanded by 0.6% and is higher than estimated.

Consumption, a key component representing around 60% of Japanese GDP, remained unchanged, but there was a cut in government consumption. In fact, the Japanese government undertook a downward revision of the public investment estimate to 1.2%.

Exports, another engine of the Japanese economy, are left with a contraction of 2.4% quarter-on-quarter.

These figures support the Japanese government’s view that the country’s economy is recovering moderately, despite global uncertainty over trade tensions between the United States and China, Japan’s main trading partners.

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.

June 12, 2019

Chinese markets fall with consumer prices rising to 15-month highs

Asia Pacific stocks traded lower on Wednesday, June 12, after a Wall Street session saw the end of the Dow Jones Industrial Average winning streak.

Mainland Chinese equities fell at the end of the first part of the session. Official Chinese inflation data showed that the producer price index rose 0.6% year-on-year in May, meeting analysts’ expectations. The CPI also rose 2.7% year-on-year in the same period, its fastest pace since February 2018 and in line with expectations. Hong Kong’s Hang Seng index fell 1.59% as protests over China’s controversial extradition law continued.

Japan’s Nikkei 225 traded unchanged at the end of the session, with Softbank Group shares down more than 2%. In South Korea, the Kospi fell slightly. Australia’s ASX 200 rose slightly, improving most sectors.

On Tuesday, June 11, U.S. stocks closed slightly lower and took a breather after posting strong gains at the beginning of the month.

The yuan appreciated after the Central Bank of China said it would sell yuan in Hong Kong at the end of June. It is a move that some analysts think is aimed at halting the sharp drop in the yuan.

The dollar hit an 11-week low Wednesday in Asia, as the U.S. Federal Reserve is expected to cut interest rates in the coming months.

The euro was little affected by the U.S. president’s accusation that Europe is devaluing its currency. So far in June, the euro has risen approximately 1.4% against the dollar. Trump has said that the euro and other currencies are devalued against the dollar and put the US at a great disadvantage. He then qualified by saying that a weak dollar favours employment.

Oil prices fell by more than 1% on Wednesday and were affected by a weak outlook for oil demand and an increase in crude oil stocks in the US. All this despite continued OPEC-led supply cuts. The U.S. Energy Information Administration (EIA) reduced its forecasts for global oil demand growth in 2019.

Gold hit weekly lows during Wednesday’s Asian trading session, despite concerns about trade between China and the U.S. rising sharply. This curbed risk appetite and increased the attractiveness of gold bullion as a safe haven.

European markets are expected to open lower on Wednesday.

Equities took a breather

Dow goes down breaking a winning streak for 6 consecutive days.

On Tuesday, June 11, U.S. equities closed slightly lower and took a breather after posting strong gains at the beginning of June.

The Dow broke a six-day winning streak. However, the S&P 500 remained around 2.4% below the intraday record.

It is still early, but there are many companies in the S&P 500 that are reaching new highs and there are expectations that this index can test the levels seen in April.

Investor sentiment was negative in May and now, with stocks rallying, pessimism is being replaced by optimism.

European markets close moderately bullish despite tariff threats

European shares rose slightly on Tuesday, June 11, after the U.S. president announced that tariffs would be imposed on another $300 billion of Chinese goods if President Xi does not attend the G-20 meeting.

The pan-European Stoxx 600 closed slightly higher, while basic resources rose 2.8%. The automotive and spare parts sector rose by 1.7%. Most sectors were in positive territory.

German automotive stocks, including BMW, Daimler and Volkswagen, rose on Tuesday. The end of the confrontation between Mexico and the United States supported a sector that has many assembly plants in that country.

The race to replace the UK prime minister has begun. There are ten candidates in the race who aspire to the leadership of the Conservative Party. The candidates are separated mainly by their positions in the Brexit negotiations.

Tuesday’s data in the UK showed that wages in the previous quarter exceeded expectations, while employment growth slowed. Still, the unemployment rate remained at its lowest level since 1975.

Hedge Funds seek refuge in thirteen-month high gold

The fear that the U.S.-China trade war will drag on, or end without an agreement, has led Hedge Funds to bet on gold.

Last week they increased their long positions in this precious metal to a 12-year high, just when it hit 13-month highs. Signs of weakness in the global economy and geopolitical tensions are tilting investors towards the search for safe assets.

The leaders of the International Monetary Fund and the World Bank have lowered their growth forecasts for this year and next.

The precious metal is also favoured by expectations of a rate cut by the Federal Reserve. Lower rates make gold more competitive with other interest-bearing assets.

In this context, gold, traditionally known as a safe-haven asset, has gradually become one of the preferred options for hedge funds.

Trump’s volatile strategy with Mexico has its dangers

There is growing concern about the damage that the American president’s position may cause, despite the latest truce.

The furious congressmen warned the president of the United States that he had abused executive power by declaring a national emergency for Mexico. They demanded that he reconsider before it was too late.

This did not happen in Washington last week, but in January 1995. Now history repeats itself.

In 2018, Mexico was the United States’ third largest trading partner, just behind Canada. Between the two countries they had a turnover of $678 billion. The companies have about 110 billion dollars invested in Mexico, in the country live about 1.5 million Americans.

President Trump suddenly backed down on Friday night, three days before the tariffs came into effect. He said Mexico had agreed to strong measures to curb immigration.

However, experts warn that it will probably take time to repair the damage caused by Trump’s threat. Now, one of the main problems is that businesses have seen that they depend on presidential whims.

Analysts say all rules have been violated by pressuring and threatening Mexico in this way.

Foxconn is ready to relocate Apple production out of China if necessary

Foxconn Technology Group said it is ready to move production out of China if necessary. Apple is its biggest customer.

The electronics assembler tried to dispel investor concerns about the U.S.-China trade dispute. The Taiwan-based company is trying to ignore investor concerns.

Is the U.S.-China relationship simply suffering from increased tensions or were the events of mid-May a sign of something more serious?

Amazon overtakes Apple and Google to become the world’s most valuable brand

Amazon has surpassed Google and Apple to become the world’s most valuable brand with $315.5 billion in market capitalization. That’s 52% more than last year.

Apple ranks second, with a value of $309.5 billion, and Google is in third place, with $309 billion.

Google and Apple had spent 12 years together at the top of the list and Google took first place in 2018.

Amazon has been increasing investments in a number of companies as its core business slowed. Among them are Aurora, an auto startup company, and Rivian, an electric truck company, as well as Amazon Air, its aircraft business.

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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June 13, 2019

Shares in Asia drop with falls in Hong Kong after massive protests

Asia Pacific stocks were mostly traded down on Thursday, June 13, following Wall Street. Risk sentiment is deteriorating amid uncertainty that the U.S. and China could reach an agreement at the Group of 20 summit in Japan on June 28-29.

Mainland China’s shares recovered from the previous downturn and rose at the end of the session. The Hong Kong stock exchange, which is the gateway to China, is experiencing sharp declines. So the outlook for China has been affected in the last month.

The Japanese Nikkei 225 fell slightly in the last part of the session. In South Korea the Kospi fell, with the shares of chip maker SK Hynix dropping more than 3%. Australia’s ASX 200 has also lost ground.

The Japanese yen rose sharply during Thursday’s Asian trading. The yen, which tends to attract investors in times of market turbulence and geopolitical tensions, gained 0.5% against the Australian dollar and 0.15% against the euro. Risk aversion and falling stock markets support the yen as usual.

The Australian dollar’s poor performance has boosted the yen. Australian employment data did not appear to be discouraging, but it appears that some analysts felt that this was a good opportunity to sell the Australian dollar. Australia’s unemployment rate remained stagnant at 5.2% in May, while the increase in part-time hiring is compounded by the higher labour force. This signal ensures a further cut in interest rates, perhaps next month.

Thanks to the bad results of the European currencies, the dollar has managed to rise. Recent inflation data has improved the Federal Reserve’s interest rate cut expectations. U.S. equities fell on Wednesday, June 12, pressured by the fall of banks and technology companies.

The euro was affected by Donald Trump’s statement that he was considering sanctions on Russia’s Nord Stream 2 gas pipeline project and warned Germany not to rely so heavily on Russia for energy.

The pound sterling fell after British lawmakers stopped an attempt, led by the opposition Labour Party, to allow Parliament to block a Brexit without agreement.

On Thursday oil prices fell again, due to continued increases in U.S. crude oil reserves and concerns about lower demand growth. There were moments of panic during the session. The U.S. Energy Information Administration (EIA) reported Wednesday that crude oil reserves rose unexpectedly for the second week in a row. Reserves increase by 2.2 million barrels, after forecasts of a decrease of 481,000 barrels.

Gold advanced as demand for metal as a safe asset rose. This is due to expectations of an interest rate cut by the Federal Reserve following the release of inflation data and escalating trade tensions between the world’s two largest economies.

European markets are expected to open downward on Thursday.

The Dow broke a winning streak

U.S. Indices fall for second consecutive day due to Banks and Technology.

U.S. equities fell on Wednesday, June 12, pressured by the fall of banks and technology companies. The sharp rise at the beginning of the month was held back for the second day in a row.

On Tuesday, the Dow broke a winning streak of six consecutive days.

Markets are in tune with the evolution of world trade, after Donald Trump said he is waiting for a trade agreement with China. It all depends on the meeting with the Chinese president at the G20 summit, where Beijing is expected to reach agreement on five main points that have not yet been publicly agreed.

European shares close down after US and China adopt tougher strategies

European equities were down on Wednesday, June 12, after the two giants announced that they were continuing the ongoing trade war for the time being.

The Stoxx 600 pan-European index dropped slightly, while oil and gas stocks led losses with a 2.1% decline. Banks did not help either, with a 1.1% drop. Media stocks were the best performers.

Both Mario Draghi and Christine Lagarde of the ECB and IMF respectively warned on Wednesday about the negative effects of trade disputes.

In the UK, Parliament has refused to veto a Brexit without agreement by voting against a motion by the Labour Party proposing to enact an Act giving Parliament the power to ratify a disorderly breach of the EU. That power ultimately belongs to the Executive.

The GDP of the G20 countries grows in the first quarter of the year

The gross domestic product of the G20 countries grew by 0.8% in the first quarter of 2019 to 3.3%. It is one tenth higher than in the previous three months.

China recorded the fastest rate of expansion at 6.4%. The worst figure was seen in Turkey, whose GDP contracted by 2.8% in the first three months of the year.

China’s CPI has its biggest annual rise in May

China’s consumer price index, the main indicator of inflation, rose by 2.7% year-on-year in May.

This is a consolidation of the upward trend of the last three months and the biggest rise since May 2018.

According to data published by the country’s National Statistics Office, in May the increase in food prices stood out, with 7.7% year-on-year, partly due to the increase of 26.7% in the price of fresh fruit or 13.3% of fresh vegetables.

Pork, the most popular meat product for Chinese consumers, rose 18.2% year-on-year, after the already strong growth of 14.4% recorded the previous month. This is the worst figure for pork in 35 months. It is mainly due to the shortage of this type of meat caused by African swine fever.

This week’s protests in Hong Kong are much more

More than 200,000 demonstrators took to the streets of the city last Sunday to oppose a local government proposal that allows fugitives to be handed over to mainland Chinese authorities.

While many signs and chants focus on opposing the extradition proposal, the protests actually focus on a struggle for political autonomy.

The people of Hong Kong are fighting for the amendment of a set of extradition laws, but some say the demonstration has become part of the broader struggle for autonomy.

When it took over from the British, China promised that Hong Kong would retain certain freedoms, such as freedom of speech and an independent judiciary until 2047.

This has led to a political situation that is often described as ‘one country and two systems’.

Elon Musk says Tesla still plans to offer insurances

On Tuesday, during Tesla’s annual shareholder meeting, CEO Elon Musk said his insurance offering, which he expects his automobile company to launch in May, is still underway.

Musk said Tesla has an advantage in insurance because it has a direct knowledge of a person’s risk profile based on the car.

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.

June 14, 2019

Asian markets rise amid tensions in the Middle East

Asia-Pacific stocks traded slightly higher on Friday, June 14, as oil prices rose following attacks on two tankers in the Gulf of Oman on Thursday.

Mainland Chinese markets fell at the end of the session. The Nikkei 225 in Japan rose slightly in the latter part of the session. South Korean Kospi dropped slightly. In Australia, the ASX 200 was almost flat.

American stocks rose on Thursday, June 13, extending the strong gains of the beginning of the month. Disney shares and the energy sector were the best.

The U.S. currency rallied as investors focus on the Federal Reserve meeting next week. The two-day FOMC meeting will begin on Tuesday. Rising trade tensions, slowing U.S. growth and declining hiring in May make at least two rate cuts expected this year.

The Japanese yen reacted little to the latest round of trade negotiations between Tokyo and Washington. Japan and the United States deepened their agreements on each country’s position on trade.

The Australian dollar fell, with investors betting on aggressive interest rate cuts to support the economy.

Oil rose for the second day in a row after attacks on two oil tankers in the Gulf of Oman. Concern is growing over the reduction of crude oil flows through one of the world’s most important shipping routes. Attacks near Iran and the Strait of Hormuz pushed up oil prices by up to 4.5% on Thursday. These events have slowed the fall of recent weeks. This is the second time in a month that several oil tankers have been attacked in the most important oil supply area of the world. This is happening in the midst of growing tensions between the United States and Iran. Washington quickly blamed Iran for Thursday’s attacks, but Tehran denied the accusation. Developments in the Gulf appear to have taken on a military dimension and action is now expected from the United States Fifth Fleet and other military contingents in the region.

The gold advanced strongly approaching its peak of the last 14 months. The trade situation and the new monetary policies drove the precious metal. Middle East concerns and potential conflicts also weigh on investor risk sentiment. In an environment of low growth and high liquidity, money has to find some new source of investment and it seems that the market has come to the conclusion that gold is a good asset for times of crisis.

European markets are expected to open up on Friday.

U.S. indices rise led by Disney

U.S. equities rose on Thursday, June 13, extending the strong gains of the beginning of the month. Disney shares and the energy sector were the best.

Disney shares were a strong supporter, rising more than 2% after Morgan Stanley raised its price target to $160 per share. The Company’s new streaming service could boost the number of its global subscribers.

Oil prices skyrocketed, amid reports of an incident with several oil tankers in the Gulf of Oman.

The Energy Selection Sector SPDR Fund rose by more than 1% as oil prices rose. Hess and Phillips 66 performed best within the fund, with an increase of more than 2.7% each.

European equities rebound as oil prices rise

European stocks rebounded on Thursday 13 June. The auction of 5G networks in Germany brought the telecommunications sector up.

Meanwhile, an incident with several oil tankers in the Gulf of Oman led to a sharp rise in oil prices that rose by almost 4%.

The pan-European Stoxx 600 appreciated slightly at the end of the session. Basic resources led the gains, while media stocks were down.

Luxembourg Prime Minister Xavier Bettel said there would be no renegotiation of the UK’s exit agreement with the European Union. The reminder comes as candidates from the Conservative party, competing to replace Theresa May, faced a first ballot.

Euro-sceptic Boris Johnson, who launched his campaign with the promise to remove Britain from the European Union on 31 October with or without agreement, won the majority of votes. Jeremy Hunt came in a distant second.

The Swiss National Bank continues with its ultra relaxed monetary policy. He blames the rise in trade tensions between the United States and China for the rise of the Swiss franc as a safe haven currency.

Crude oil goes up after oil tanker fire in Oman Sea

Oil soars by about 4% after confirmation that an oil tanker has caught fire in the Oman Sea. The causes of the incident are unknown, but one of the ship’s operators has referred to it as an attack.

The Brent of reference in Europe advances 3.6% and exceeds 62 dollars, while the West Texas adds 3.5% and touches 53 dollars.

The event further complicates growing tensions in the region, weeks after four ships, including two Saudi oil tankers, were sabotaged in what the United States said was an Iranian attack on its naval forces.

The U.K. Royal Navy has reported that it is investigating what happened. In addition, it has urged extreme caution amid growing tensions between Iran and the United States.

Iranian state media have reported that two oil tankers were attacked. The oil tankers Frente Altair and Kokuka Courageous have suffered significant damage and their crews have been evacuated.

A spokesman for the U.S. Navy’s Fifth Fleet in Bahrain told the Associated Press that they were aware of what had happened and are trying to gather more data.

Eurogroup meets to reach agreement on eurozone budget

Eurozone economy and finance ministers meet in Luxembourg with the aim of reaching a political agreement on the main features of a future eurozone budgetary instrument.

Finance ministers are mandated to reach an agreement to underpin the architecture of the single currency.

The main disagreement relates to the way in which this budget is to be financed. It seems clear that it will be framed within the overall budget of the European Union and, in that case, would have an allocation of 17 billion for the whole period between 2021 and 2027.

However, there are countries such as France and Germany which advocate supplementing this allocation with national contributions.

Another pillar of the debate will focus on completing the legal texts that make up the reform of the competences of the European Rescue Fund (MEDE).

In Greece the middle class will turn their backs on Tsipras in the July general elections

Syriza is now a more moderate party with a solid electoral base.

If the polls don’t fail, the reign of Alexis Tsipras as Greek prime minister will come to an end prematurely as Syriza faces a possible defeat in next month’s general election.

The far-left leader won a surprising victory in 2015, promising to abandon austerity and remove the country from the Eurozone if Greece’s creditors showed their opposition.

The Greek middle class, tired of the sharp tax increases, has been indifferent to the tepid economic recovery achieved by Tsipras and has turned its back on his party.

As prime minister, Tsipras has shown himself to be a cunning pragmatic leader, who in a matter of months put aside his aggressive rhetoric.

He used a referendum in which voters supported Syriza’s harsh policy towards Europe and rejected the proposal of his finance minister Yanis Varoufakis to renounce the euro and re-adopt the drachma.

In addition, Tsipras was thoroughly employed to carry out the harsh fiscal measures imposed by Brussels and the International Monetary Fund.

But his fellow citizens are disappointed that he has failed to deliver on his promise to end a latent problem in Greece. It is known as diaploki, a Greek term that sums up the relations between the media, banks and the political world through which corruption is encouraged and foreign investors are driven away.

Boris Johnson clearly wins first vote to enter Downing Street

Conservative Party parliamentarians have given broad support to Boris Johnson to be the future prime minister and leader of this formation.

Johnson received 114 votes in the first round of the succession process. This result further elevates his favourite status, although there are still several votes ahead.

Johnson is also the favourite among the militancy that, in general, wants to seal the Brexit on 31 October, even if it is without a friendly agreement of rupture with the European Union.

Behind him, at a great distance, is the current Foreign Minister, Jeremy Hunt, with 43 votes. In third place is the Environment Minister, Michael Gove, with 37 votes, and in fourth place is the former Brexit minister, Dominc Raab, with 27 supporters.

There are other candidates in the race. Sajid Javid, Minister of the Interior. Matt Hancock, Minister of Health. Rory Stewart, minister of development and international affairs and the only candidate to support a new referendum.

Next week there will be another vote, in which those who do not reach 33 votes will be eliminated.

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.

June 17, 2019

Asian equities trade mixed as investors await Federal Reserve meeting

Asian equities were traded in a mixed manner on Monday, June 17, with investors waiting for the U.S. Federal Reserve meeting.

Mainland Chinese equities were bearish at the end of the first part of the session. In Hong Kong, the Hang Seng index rose slightly, a day after large crowds gathered to demand the resignation of the authorities after the suspension, even if not withdrawal, of a controversial extradition bill. The Nikkei 225 in Japan traded slightly higher. In South Korea, the Kospi fell slightly, while Australia’s ASX 200 did the same.

American stocks fell on Friday, June 14, with investors digesting semiconductor stock weakness along with weak Chinese data.

The U.S. currency hit a two-week high as U.S. retail sales data dampened fears of a downturn in the world’s largest economy. The U.S. dollar benefited as the Federal Reserve is awaiting this week’s meeting. Few expect the Fed to cut interest rates in Wednesday’s monetary policy review, but traders are betting on cuts in the coming months. In addition to the positive data from the U.S., the dollar is supported by the weakness of other currencies, particularly the euro and the antipode currencies.

With growth slowing and inflation remaining well below its target, the European Central Bank has recently raised the prospect of an even greater stimulus, arguing that a rate cut or even more asset purchases may be necessary.

The central banks of Australia and New Zealand face a similar problem as the global economy prepares for the consequences of the US-China trade dispute.

Oil prices rose during Monday’s Asian session after Secretary of State Mike Pompeo said Washington will take all necessary measures to ensure safe navigation in the Middle East. Prices had risen by as much as 4.5% Thursday after attacks on two oil tankers near Iran and the Strait of Hormuz. It was the second time in a month that oil tankers have been attacked in the world’s most important area for transporting oil. Washington blamed Iran for Thursday’s attacks, which provoked denial and harsh criticism from Tehran.

During Monday’s Asian trading, gold remained stable after hitting a 14-month high. The dollar’s strength is weighing on investors as they await this week’s U.S. Federal Reserve meeting. Markets are betting on an early rate cut as uncertainty drives safe-haven assets. For now, gold prices remain firm.

European markets are expected to open down on Monday.

Chip manufacturers plummet

U.S. markets fall as chip manufacturers plummet and China’s data disappoints.

U.S. equities fell on Friday, June 14, with investors digesting a decline in semiconductor equities along with weak Chinese data.
Chip manufacturers fell. The VanEck Vectors Semiconductor ETF fell by 2.4%, led by a 6.3% drop in Broadcom. The chip manufacturer recorded lower-than-expected revenues in the previous quarter and cut its forecasts for 2019.

Other semiconductor stocks also declined. Micron Technology, Advanced Micro Technology and Applied Materials fell more than 1%. Intel lost 0.9%.

Weak demand and pressure on Huawei from the US are the reasons for these poor results.

U.S. retail sales rose 0.5% in May, below the 0.6% expected by surveyed economists.

Sentiment on Wall Street was also affected by disappointing industrial data from China. Industrial production in China increased by 5% last month on a year-on-year basis ad is the slowest rate of growth in 17 years.

European shares close down amid tensions in the Middle East

European stocks closed on Friday 14 June in negative territory, due to increased tensions between the United States and Iran following attacks on two oil tankers in the Gulf of Oman on Thursday.

On the last negotiating day of the week world attention was focused on the Middle East, after two Norwegian and Japanese owned oil tankers respectively suffered explosions near the Strait of Hormuz on Thursday. The event pushed up oil prices sharply.

The U.S. military released images showing Iran’s Revolutionary Guard Corps removing an unexploded mine from the side of one of the sinking tankers, a claim Tehran flatly denies.

The Stoxx 600 pan-European index closed down. Technology stocks performed poorly, with a 1.75% decline in the sector.

Most other sectors were trading in red. Utilities and energy, however, recorded small gains.

European economic data was also in the spotlight, as France reported that its May consumer price index was 0.9% year-on-year and the Italian CPI was 0.9% year-on-year. Both data failed to meet expectations.

Markets do not believe new stimulus warnings from the European Central Bank

Traders question whether the European Central Bank can offer the promised aid, given the proximity of Draghi’s departure.

Seven years ago, words were enough for Mario Draghi to convince the markets that he would do ‘whatever is necessary’ to save the euro. Now that his eight-year term is coming to an end, investors think Draghi’s words are not entirely reliable.

Last week, Draghi hinted that he was ready to stimulate the economy if the global climate of political and economic uncertainty continues to hamper growth and investment. The ECB President noted that the Governing Council had initiated discussions on how to proceed should the threats materialize.

As Draghi explained, the options include lowering interest rates and launching another round of bond purchases through a third round of quantitative easing.

On this occasion, the euro has not moved much after the release and this means that markets do not quite believe that the ECB’s monetary policy will change course.

Huawei delays the launch of the folding phone until September

Huawei said his folding phone will be released in September, a little later than planned, as they perform additional tests after the debacle that Samsung had with tests of its equivalent device.

Samsung’s foldable device, the Galaxy Fold, began to break when it was tested by critics in April.

A spokesman for the Chinese technology giant said the Company is trying to launch the Huawei Mate X worldwide. They will focus on markets that are deploying next-generation mobile networks known as 5G.

The Mate X, which costs about 2,299 euros, is a device with capacity for 5G.

Huawei was forced to rule out the launch of a new laptop because he could not deliver the product because the firm is on a blacklist in the United States.

Southern European countries join forces to get power in the new European Union

Leaders from Spain, France, Italy, Portugal, Greece, Malta and Cyprus come together to form a common front in the new European cycle.

With the five major posts in the EU institutions to be decided, the main issue on the table will be the formation of a common front to place these countries in strategic positions.

The representatives will discuss the Euro Summit on 20 and 21 June, at which the budget for the Eurozone will be finalised.

The priority lines of the new multiannual financial framework will also be raised and issues of greater impact on the region, such as climate change or migration, will be discussed.

Completing the banking union is another of the issues that most interests the countries of the South, and that generates more confrontation with those of the North.

Companies must put the best possible information at the fingertips of their professionals

Data revolutionizes business, but Companies must be able to incorporate it into their internal structure.

Making the best information available to professionals is fundamental for companies to develop new business models. This is a requirement in today’s environment, in which digitization and the development of tools that amplify the customer’s relationship with the company have revolutionized consumer habits.

Companies are looking for business analysis solutions that facilitate the massive examination of data, in order to turn them into useful information, and distribute them safely and efficiently throughout the organization itself.

The data allows you to get to know your customers better, increase their loyalty and increase sales.

Among the steps to follow is to find the essential data for the business, identify its location, develop technology capable of capturing, storing and processing them quickly. It is also necessary to find specific talent and have the support of corporate management.

One of the difficulties for companies is to combine the incorporation of the latest technologies with the maintenance of their legacy systems. Combining both aspects is essential to maintain competitiveness.

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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June 18, 2019

Asian Markets mixed on the eve of Federal Reserve meeting

Asian markets show a mixed tone on Tuesday 18 June.

In Hong Kong, the Hang Seng index rose slightly, with shares in the Chinese technology company Tencent rising more than 1%. In South Korea the Kospi rose slightly, with the biopharmaceutical company Celltrion rising by more than 1%. The S&P/ASX 200 in Australia rose. Japan’s Nikkei 225 resisted the general trend and fell by 0.72% as Fast Retailing, Softbank Group and Fanuc shares fell.

The Federal Reserve will begin a two-day meeting on Tuesday. Expectations for any monetary policy change are low for now, but investors will look for clues about possible rate cuts in July, September and December. U.S. Treasury yields fell on Monday, overburdened by worse-than-expected economic data and persistent pressure from the trade conflict with China.

The pound sterling reached this year’s lows due to growing concern that Boris Johnson will be elected. This candidate for prime minister could put Britain on the road to a feared Brexit without agreement.

The Australian dollar is also at its lowest levels since the sharp fall in early January. It is being hit by rising expectations of interest rate cuts and a further slowdown in China, Australia’s largest export market.

The Japanese yen and the euro held firm, with investors attending meetings of the US Federal Reserve and Bank of Japan, as well as a conference hosted by the European Central Bank in Portugal. This will be the week of the central banks.

Oil prices fell for the second day in a row on Tuesday, after further signs that global economic growth is being hit by U.S.-China trade tensions. U.S. business sentiment has weakened and there are also signs of weakness in the labour market. The oil slump comes amid tensions in the Middle East after last week’s attacks on oil tankers. The oil market desperately needs some solid economic data to get out of this problematic situation.

Gold remained stable at the beginning of Tuesday’s Asian session, as investors await the start of the Federal Reserve’s monetary policy meeting. The central bank is expected to leave borrowing costs unchanged this time, but possibly lays the groundwork for a rate cut later this year.

European markets are expected to open lower on Tuesday.

Investors wait Federal Reserve meeting

U.S. indices rise slightly with Fed expectations.

On Monday, June 17, U.S. equities rose slightly as investors looked forward to this week’s Federal Reserve meeting. On Tuesday, the Fed will begin a two-day meeting. Expectations for any monetary policy change are low for now, but investors will look for clues about possible rate cuts in July, September and December.

Concerns about the economy have increased recently, after employment growth and manufacturing activity slowed last month. However, the US economy is expected to grow by 2.1% in the second quarter.

Facebook and Netflix were up 2.6% and 3.1% respectively, while Amazon was up 1%. Alphabet and Apple traded almost 1% higher.

European shares close on the rise

The European stock market closed higher on Monday, June 17, as investors await this week’s meeting of the U.S. Federal Reserve.

The pan-European Stoxx 600 finished just above the flat line, with sectors and major exchanges pointing in opposite directions.

Airline shares plummeted after Lufthansa issued a profit warning, causing its shares to drop almost 12% and drag the DAX down. Air France KLM and EasyJet were down 4%.

The main airlines were also in the spotlight for other reasons. The Paris Air Show began on Monday, with Airbus announcing a new aircraft. Airbus shares rose 2%. Meanwhile, Boeing’s CEO, Dennis Muilenburg, said the return to air of his 737 Max aircraft is the company’s most important objective today.

The pound sterling traded down against the dollar on Monday, amid the current uncertainty surrounding Brexit and Britain’s domestic policy.

Possible interest rate cuts starting in July

While the Federal Reserve is not expected to take action at its two-day meeting beginning Tuesday, it is expected to pave the way for an interest rate cut in July.

The Federal Reserve is expected to remove the word ‘patient’ from its statement, which could indicate that it is willing to move forward on rate cuts to help the U.S. economy overcome a period of slower growth and the possible impacts of trade wars.

Federal funding futures now point to a probability of about 80% for a cut in July and about 20% for a cut in June.

President Donald Trump has been calling for an interest rate cut and has once again criticized Powell, saying the Dow would be 10,000 points higher if the Federal Reserve had not raised interest rates.

While Wall Street is obsessed with Tesla, another car manufacturer is silently suffering problems

Tesla is reversing its negative trend after a sharp drop earlier this year.

As Wall Street watches Tesla return, Ford Motor is suffering somewhat quieter.

Ford is also recovering from previous heavy falls and, if it remains above the longer-term trend line, it could come back.

The U.S. trade battle with China and Mexico has hit the auto industry hard.

Inflation loses steam despite central bank measures

Inflation, which had been installed in an unusual moderation in Europe and the United States, is losing steam despite years of economic recovery, job creation and the policies of low interest rates and abundant liquidity adopted by the main central banks.

Globalisation, digitalisation and sluggish demand in key countries such as Germany and precarious employment are behind this behaviour.

These factors are now compounded by the slowdown in the world economy and, on a temporary basis, the containment of oil and raw material prices.

Even without energy developments, inflation in Europe is clearly below the 2% recommended by the European Central Bank.

Inflation is also moderate in the United States, where prices rose by 1.8% in May. That is two tenths less than in April. Core inflation slowed to 2%.

The sluggishness of prices is not new in developed countries but, apart from Japan, usually coincides with periods of crisis.

Eurozone labour costs rebound in first quarter

Hourly labour costs in the euro area grew by 2.4% in the first quarter of 2019. This represents a one-tenth increase over the fourth quarter of last year.

Meanwhile, for the European Union as a whole, the year-on-year rise in labour costs was 2.6%. This represents a slowdown of two tenths of a percentage point with respect to the data for the immediately preceding quarter.

The biggest increase in hourly labour costs in the European Union was in Romania with +16.3%, followed by Bulgaria with +12.9% and Slovakia with +8.7%.

There was only a decline in Greece, where they fell by 0.2%.

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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June 19, 2019

Chinese shares rise after announcement of meeting between Chinese and U.S. leader

On Wednesday, June 19, the Asian stock market rose sharply against the backdrop of an agreement between China and the United States.

Mainland Chinese equities shot up at the end of the session. Hong Kong’s Hang Seng index rose 2.37%. In South Korea, the Kospi rose by 1.11% with the shares of Samsung Electronics and chip maker SK Hynix rising by 2.25% and 4.57%, respectively. Australia’s S&P/ASX 200 also gained 1.02%, with almost all sectors operating positively.

In Japan, Nikkei 225 rose 1.66% while Softbank Group shares soared 3.57%. Apple’s supplier Japan Display rose sharply by 12.73% after information that Apple could help the display manufacturer. For the Bank of Japan and policy makers the current message is clear: ‘the industrial part of the Japanese economy is in recession’.

American stocks rose on Tuesday, June 18, after President Donald Trump said he would meet his Chinese counterpart, Xi Jinping, at the upcoming G-20 summit. This raises hopes for a U.S.-China trade agreement.

The Chinese yuan rose sharply, while the U.S. dollar hit a two-week high as investors await the Federal Reserve’s decision.

The euro was falling at the same time as a drop in German government bond yields, which hit record lows after Mario Draghi said the European Central Bank will have to relax its monetary policy if inflation does not return to its target. A survey by the ZEW Institute showed that the mood of German investors had deteriorated considerably in June, which also affected the euro.

The Australian dollar recovered from a 5.5 month low. This is due to rising expectations that the Reserve Bank of Australia will have to cut interest rates again. The possibility of a trade agreement between China and the United States has benefited both the Chinese yuan and the Australian dollar.

Oil prices remain stable. U.S. business sentiment has weakened and there are also signs of weakness in the labour market. The oil slump comes amid tensions in the Middle East after last week’s attacks on oil tankers. The oil market desperately needs some solid economic data to get out of this problematic situation.

Gold remained stable, as investors await the conclusion of the Federal Reserve’s monetary policy meeting. The central bank is expected to leave borrowing costs unchanged this time, but possibly lays the groundwork for an interest rate cut later this year.

European markets are expected to open mixed on Wednesday.

Hopes of a trade agreement

The Dow climbs over 350 points in hopes of a trade agreement.

American stocks rose on Tuesday, June 18, after President Donald Trump said he would meet his Chinese counterpart, Xi Jinping, at the upcoming G-20 summit. This raises hopes for a U.S.-China trade agreement.

Trump said in a tweet that he had a very good phone conversation with Xi. ‘We will have an extended meeting next week at the G-20 in Japan. Our respective teams will start talking before our meeting.’

Boeing and Caterpillar shares were up 4.2% and 2.7%, respectively. Deere shares also gained more than 3%. Semiconductor stocks jumped after Trump’s tweet. The VanEck Vector Semiconductor ETF rose more than 4%, led by the strong earnings of Nvidia and Micron Technology.

On the other hand, the stock market also benefited as investors bet that the Federal Reserve prepares the ground for a more accommodative monetary policy.

European shares close on the rise after Draghi’s speech

European equities closed on Tuesday 18 June with a sharp rise, after the president of the European Central Bank suggested that more stimulus will be given to the economy if inflation does not recover.

Draghi’s comments caused the euro to fall against the dollar and also boosted European equities. The Stoxx 600 index rose more than 1%, along with the German Dax and the French CAC 40.

Trump criticized Draghi’s comments, pointing out that the ECB’s additional stimulus makes it ‘unfairly’ easier for Europe to compete with the United States.

The pan-European Stoxx 600 recovered from the fall at the start of the session and finished with a 1.8% rise. It has marked the maximum of one month. All sectors and major exchanges were in positive territory, with basic resources at the forefront and a rise of almost 3%.

The remaining six Conservative Party candidates in Britain will face a second round of voting. Brexiteer Boris Johnson continues to lead, despite refusing to participate in Sunday’s live television debate.

Yellen won’t finally go to Sintra and sends Fischer instead

The US representation at the Sintra Central Bank Forum is fading. Fed President Jerome Powell will not attend the event, and former Fed President Janet Yellen was scheduled to attend instead.

Mark Carney (Governor of the Bank of England), Mario Draghi (President of the ECB) and Stanley Fischer (former Fed Vice-President) will attend.

The agenda starts on Tuesday with Mario Draghi. Luis de Guindos, vice-president of the ECB, will then speak, giving way to the first panel on the ‘Real Convergence of Economic and Monetary Union’, in which several professors from the universities of New York, Sydney and Maryland will participate.

Peter Praet, former chief economist of the ECB, will talk about the single monetary policy and will give way to a panel moderated by Philip Lane, chief economist of the ECB, in which the first 20 years of the Economic and Monetary Union will be debated.

In the afternoon the ‘main course’ of the day will take place with the aforementioned panel on monetary policy in which Carney, Draghi and Fischer will participate.

Europe faces new barriers to trade

In total the European Union suffers from a total of 425 barriers. China and Russia are the most restrictive.

The European Commission is concerned about the rise of protectionism in global trade. The Commission underlines the continuing increase in barriers faced by European companies in foreign markets.

However, it emphasises that, thanks to the strong response of the European Union, 123 of these obstacles have been removed since the start of the current Commission’s mandate in 2014. This has allowed for additional exports worth more than €6 billion in 2018.

Despite the turbulence that surrounds it, the European Union remains at the forefront of global trade. It is the main trading partner of more than 80 countries and has 40 trade agreements with 72 countries around the world.

Germany’s economy cools considerably

The economy is currently cooling in Germany, after a period of great economic prosperity.

In its June economic bulletin, the Bundesbank adds that domestic economic impulses remain intact, but the main economic trend is contained.

The downturn in industry, which is suffering from weakening exports, is the decisive factor in the weakening of the German economy.

The Bundesbank forecasts that exports will grow stronger again in the second half of the year, from which the industry could benefit.

Private consumption and investment could rise solidly in the future, but weaker than this year, because employment growth will slow down due to demographic factors.

The Bundesbank also expects financial policy to have an expansive effect in the coming years.

Germany’s central bank expects the German economy to grow by 0.6% this year and 1.2% in 2020, with inflation of 1.4% and 1.5%, respectively.

Technology shares have been Wall Street’s favourites for the last decade

The alarm has been raised about high valuations of technology stocks and investor optimism when it comes to the antitrust investigation at Big Tech.

The information technology sector has led this year’s stock rally, but that rally has also caused valuations to reach unrealistic levels.

Software stocks are at their peak, near the peak of the ‘dot-com’ bubble.

Microsoft has led the race in software stocks, with a 30% rise this year.

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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June 20, 2019

China’s Stocks rise on Fed announcement of rate cut

Asian equities rose on Thursday, June 20, after the Federal Reserve left interest rates unchanged but opened the door to cuts in the near future.

Mainland Chinese equities were rising at the end of the first part of the session. Hong Kong’s Hang Seng index rose by 1.01%, while Chinese technology giant Tencent stocks rose by 1.61%. In South Korea, Kospi was slightly up, while Australia’s S&P/ASX 200 rose slightly.

In Japan, the Nikkei 225 gained 0.65%, with most sectors trading higher. The movements in Tokyo occurred when the Bank of Japan kept interest rates unchanged, emphasizing that global risks were increasing. The BoJ said the risks with respect to foreign economies are large, so one has to look carefully at how they affect Japan’s corporate and family sentiment.

U.S. equities rose on Wednesday, June 19, reinforcing their winning streak this month after the Federal Reserve opened the door to a less restrictive monetary policy in the near future. Chairman Donald Trump continues to believe he has the authority to replace Federal Reserve Chairman Jerome Powell.

The U.S. dollar was on the defensive after the Federal Reserve indicated it was willing to lower interest rates to combat growing global and domestic risks. Although the market had anticipated what Powell said, the dollar’s decline was significant. The main question is no longer whether the Fed will cut rates in July, but whether it will do so by 25 or 50 basis points.

Following the Fed meeting, U.S. bond yields fell and the dollar fell against the yen. On Thursday, the Yen was watching the Bank of Japan’s monetary policy decision.

The EUR rose slightly to $1.1248. The common currency has rebounded in the last two weeks. The British pound rose sharply ahead of Thursday’s Bank of England (BoE) monetary policy meeting. In contrast to the general caution shown by other major central banks, the BoE is expected to repeat its intention to raise borrowing costs, provided it is allowed to do so by Brexit.

Oil prices rose more than 1 percent on Thursday, as official data showed that US crude oil inventories fell more than expected and that OPEC and other producers finally agreed on a date for a meeting at which they will discuss further production cuts. After reaching two-year highs, U.S. crude oil stocks dropped 3.1 million barrels last week. Analysts expected falls of 1.1 million barrels.

Gold reached its highest level in more than five years during Thursday’s Asian trading. Federal Reserve Chairman Jerome Powell said they agree that the arguments in favour of lowering interest rates are favourable and those comments seem to have favoured gold.

European markets are expected to open up Thursday.

An interest rate cut could be close

U.S. indices closed higher after the Federal Reserve hinted that an interest rate cut could be close.

U.S. equities rose on Wednesday, June 19, reinforcing its winning streak this month after the Federal Reserve opened the door to a less restrictive monetary policy in the near future.

The Fed kept interest rates unchanged, as expected. They removed the word ‘patient’ from her statement and said they would act ‘appropriately’ to sustain the economy.

Health stocks, which generally behave well after the Federal Reserve cuts interest rates, were the most profitable in the session. The sector rose 1%, led by Allergan and DaVita.

European stocks close mixed as investors follow Federal Reserve meeting closely

On Wednesday, June 19, the European stock market ended the session without major changes.

The Stoxx 600 pan-European index was around the flat line, with sectors and large exchanges showing a mixed tone. Core stocks led losses with a decline of 1.5%, while car and bank stocks rose by around 1%.

The German telecommunications company 1&1 Drillisch topped the European index, with an increase of 9.5% at the end of the session.

In the UK, the number of Conservative Party candidates to replace Theresa May has been reduced to five. There will be a third vote on Wednesday. Former Foreign Minister Boris Johnson remains the big favourite.

UK economic data showed that the country’s inflation rate cooled in May and manufacturing cost pressures fell to their lowest level in three years. Consumer prices rose at an annual rate of 2% in May, meeting expectations.

Eurozone inflation moderates in May

The annual inflation rate in the euro area was 1.2% in May. It is half a percentage point below the previous month’s price increase and the smallest increase since April 2018.

In the European Union as a whole, annual inflation stood at 1.6% in May. It is three tenths below the price increase registered the previous month.

Among the EU countries, the lowest price increases corresponded to Cyprus (0.2%), Portugal (0.3%) and Greece (0.6%). The highest inflation rates were observed in Romania (4.4%), Hungary (4%) and Latvia (3.5%).

The balance of the eurozone’s trade balance fell in April by 8.2% with respect to the same month last year, reaching a figure of 15.7 billion euros.

The trade balance of the entire European Union recorded a positive balance of 1,400 million euros, compared to the deficit of 900 million euros recorded during the same month in 2018.

Apple plans to take between 15% and 30% of its production out of China

Apple has asked its major suppliers to assess the cost implications of moving 15% to 30% of its production capacity from China to Southeast Asia.

Apple is preparing a fundamental restructuring of its supply chain due to prolonged trade tensions between Washington and Beijing.

Even if the dispute is resolved, there will be no turning back. Apple has decided that the risks of relying so heavily on manufacturing in China are too great.

A lower birth rate, higher labour costs, and the risk of excessively centralizing production in a single country are adverse factors.

Some 5 million jobs in China depend on Apple’s presence in the country. Included are 1.8 million software developers and iOS App.

The Company directly employs 10,000 people in China.

Huawei CEO minimizes loss of revenue from Trump management bans

The CEO and founder of Huawei, Ren Zhengfei, minimized the impact of the U.S. ban a few days after the Company said it expected $30 billion less revenue this year.

The Company will still record more than $100 billion in revenue this year, which would be a similar result to the previous year.

Huawei’s consumer business remains strong in China. The main problem is business abroad.

Ren did not give a clear explanation of how Huawei plans to offset the decline in demand for its products after the U.S. ban.

Facebook has formally confirmed its arrival in the financial sector

The social network has created ‘Calibra’, which is a financial services subsidiary separate from the Facebook business.

Its first product will be a digital wallet with which to operate a new crypto currency: the ‘Libra’. This currency will be available in 2020. With Libra, users will be able to send and receive money through WhatsApp, Messenger and Facebook.

The goal of the company led by Mark Zuckerberg is to revolutionize the financial industry, just as it has transformed personal communications.

Facebook wants to bring basic financial services to anyone with an Internet connection.

For many people around the world, even basic financial services are still out of reach. In fact, almost half of the world’s adults do not have an active bank account and those figures are worse in developing countries and even worse for women.

The social network already draws a future in which exchanging money on its platform is as simple as sending a WhatsApp. In addition, it will be at a very low cost or even free.

The big difference between Libra and other critpto currencies, such as bitcoin or ethereum, is that it can be exchanged for real currencies at a stable exchange rate. For every Libra created, bank deposits and short-term government securities will be held in the Libra Reserve.

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.

June 21, 2019

Asian markets weaken as geopolitical tensions persist

Stocks in Asia were down on Friday, June 21, while tensions in the Middle East continue to rise.

Mainland Chinese equities rose at the end of the session. In Japan, the Nikkei 225 showed a bearish tone. In South Korea, the Kospi traded slightly lower, with LG Chem shares losing more than 1%. Australia’s S&P/ASX 200 also fell slightly, with the shares of biotech company CSL dropping more than 3%. In Hong Kong, the Hang Seng index was slightly bearish.

The dollar managed to strengthen, although it had lost ground against most currencies after the Federal Reserve decided to keep the prospect of interest rate cuts soon to support a weak economy. A fall in 10-year Treasury yields below 2% and a rise in gold above strong technical resistance, to a high of almost six years, suggest that the dollar could face a period of prolonged selling pressure.

Attention is now focused on whether the US and China can resolve their trade dispute at the G-20 leaders’ summit in Osaka next week. Analysts warn that the chances of a breakthrough are slim. China has confirmed that President Xi Jinping and U.S. President Donald Trump will meet on the sidelines of the G20 next weekend.

The British pound traded higher against the dollar following the Bank of England’s decision to hold interest rates.

Oil prices rose on Friday. The Brent is on its way to its first gain in five weeks. Iran shot down a U.S. military drone, raising tensions in the Middle East and pushing up oil prices. The U.S. president minimized the destruction of the drone, but the tension remains high and we must remember the attacks on oil tankers in the area. In this situation, supply disruptions are feared.

However, the demand outlook has improved, with the Federal Reserve expected to cut interest rates at its next meeting, and with Beijing and Washington planning to resume talks to resolve a trade war that has hit global economic growth prospects.

Gold rose more than 1.5% on Friday, surpassing $1,400 for the first time since September 2013. The possibility of interest rate cuts affects the U.S. dollar and the U.S. Treasury. Tensions in the Middle East also pushed up gold. So far this week, gold has risen in price by almost 5% and almost 10% so far this year. Gold records its biggest weekly gain since April 29, 2016 and is on the rise for the fifth consecutive time. The global wave of monetary policy easing has the impact of pushing bond yields down and is a key positive factor for gold.

European markets are expected to open lower on Friday.

The 10-year Treasury yield fell below 2%

The S&P 500 closes with a new record and the Dow rises almost 250 points.

U.S. equities rose on Thursday, June 20, led by strong gains in technology and energy. Wall Street already anticipates the possibility that the Federal Reserve will cut interest rates next month.

The 10-year Treasury yield fell below 2% for the first time since November 2016. Investors applaud the decline in the benchmark of mortgage interest rates and corporate bonds.

The energy sector rose by more than 2%. They led the 11 sectors of the S&P 500 as oil prices rose. Oracle shares were up more than 8%, thanks to higher-than-expected earnings. General Electric’s 2.8% rise pushed the industrial sector up more than 1.6% in the day.

Markets are based on numbers and perceptions. Interest rates are currently perceived to be cutting and that is going to drive markets higher.

European equities rise after Bank of England keeps interest rates unchanged

On Thursday, June 20, the European market rose sharply as investors reacted to Bank of England and Federal Reserve interest rate decisions.

The Stoxx 600 pan-European index closed higher after reaching its highest level since May 6.

Technology stocks led the gains with a 1.6% rise, while travel and leisure stocks were the worst performers with a 1.1% drop. The German DAX rose slightly to a nine-month high.

The Bank of England kept interest rates at 0.75% and reduced its growth forecast for the UK economy to zero in the second quarter of 2019. They cite tensions in world trade and the growing risk of a Brexit without agreement as the main reasons for the slowdown in its growth.

Federal Reserve maintains new interest rate line

While the Federal Reserve did not formally say there would be rate cuts in 2019, traders clung to the hope that monetary policy would relax.

The decision to hold rates was 9-1. Most Fed members see no change this year.

The Fed will focus on providing the right response to an uncertain environment.

Powell said policymakers are concerned about some of the recent economic developments. Right now they are seeing the slowdown in global growth, persistently low inflation that falls short of the 2% target, and the effect of tariffs from the United States and its trading partners.

Trump begins campaign with the same message than in 2016

The president of the United States formally launched the campaign for re-election with a speech more focused on airing old battles than on proposing a program for his second term.

He continues to cling to the populist and apocalyptic message that brought him to power in 2016. Today his followers don’t seem to expect anything different.

The president defended that his surprising election in 2016 was a repudiation of the established political class. A political class that, according to him, was enriched at the expense of its voter base.

He said he is fighting pressure groups and special interests in Washington, even though many of them have prospered under his rule.

Only at the end of his speech did he review some of the measures of his first term, such as tax cuts for companies, his setback to environmental protection measures, departure from international agreements such as the Paris climate agreement or the nuclear pact with Iran. It also lunges against decades of calamitous trade policies. He referred to the replacement of the 2010 health law, the defense of privacy, freedom of expression, religious freedom and the right to possess weapons.

Trump only mentioned in passing the names of two of his potential Democratic rivals, Joe Biden and Bernie Sanders. Instead, he cited a dozen times his opponent of the rival party in 2016, Hillary Clinton.

Norway’s central bank raises rates for the third time in 12 months

Norway’s central bank reveals itself as the only ‘aggressive’ monetary supervisor, in an environment of accommodating turn of central banks around the world.

As widely expected, the Scandinavian regulator has raised the price of money by a quarter of a point to 1.25%. It has left the door open for another rate increase later this year. In the last ten months the central bank has increased rates by 0.75%.

In their subsequent communiqué, they indicated that they will take a cautious approach, but expect rates to continue to rise. This counteracts the wave of stimulus prepared by other central banks in the United States, Australia or Japan.

The solid growth of their economy allows them to prepare for difficult times to come.

Congresswoman Maxine Waters asks Facebook to stop ‘Libra’ launch

Democratic Rep. Maxine Waters, chairman of the House Financial Services Committee, had requested that Facebook suspend the development of Libra.

Waters said, 'Given the company’s turbulent past, I request that Facebook accept a moratorium on any move that advances the development of a cryptodivisa, until Congress and regulators have an opportunity to examine these issues and take actions.’

Facebook and a consortium of partners presented on Tuesday Libra, their long-awaited block chain project that the Company has been working on for the past year.

Libra is an open-source digital currency that people will be able to use to transfer money over the Internet. Facebook is also introducing a digital wallet, Calibra, so users can store and change their currency.

The idea that we are going to hand over our financial data to Facebook should be further explored. First of all the company should convince potential users that it is able to keep their data secret.

DISCLAIMER

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

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___MarketEvolution5

July 3, 2019

Asian markets plummet with trade relations weighing on investor sentiment

The main Asian markets traded lower on Wednesday, July 3.

The Shanghai Composite Index was down 0.7% while a private survey showed that China’s service sector growth slowed to its lowest level in four months in June. The Nikkei 225 fell by 0.75% at the end of the session. South Korean Kospi also fell 1%. In Australia, the S&P/ASX 200 outperformed the general trend and traded slightly higher.

Concerns about US trade policy continue to weigh on investor sentiment. Washington threatened on Monday to impose tariffs on 4 billion dollars of European Union goods. The new wave of proposed tariffs comes amid a 15-year dispute at the World Trade Organization over aircraft subsidies granted to U.S. aerospace manufacturer Boeing and its European rival Airbus.

U.S. shares fell on Tuesday, July 2. The banks were the worst after the United States threatened a new wave of tariffs on European products. This dampened recent optimism about the trade truce between Washington and Beijing.

The dollar rose strongly, as hopes for a trade agreement between China and the U.S. reactivated demand for safe haven currencies and U.S. bond yields at their lowest level since late 2016.

The pound remained stable. Carney, president of the Bank of England, said a global trade war and a Brexit without a deal pose major risks to the British economy. This may require more central bank assistance to cope with a recession.

The Australian dollar advanced after the Reserve Bank of Australia cut interest rates and offered a balanced view of the country’s economy.

The euro was boosted by news that the European Central Bank’s monetary policy makers are in no hurry to cut interest rates. However, the situation changed after IMF Managing Director Christine Lagarde was appointed as the ECB’s next President.

Christine Lagarde, Managing Director of the International Monetary Fund and former French Minister of Economy, has been nominated to succeed Mario Draghi. European Union leaders have agreed that Ursula von der Leyen will chair the European Commission and Christine Lagarde the European Central Bank. For his part, Josep Borrell will be the high representative of the Union for Foreign Affairs.

Oil prices rose on Wednesday, after a sharp fall in the previous session. They were supported by prolonged cuts in production by OPEC and its allies, despite concerns that the slowdown in the world economy could curb demand. Oil inventories are falling again, according to a private survey released before official data is released on Wednesday.

The Organization of Petroleum Exporting Countries and other producers such as Russia agreed on Tuesday, July 2, to extend the cuts in oil supply until March 2020. The OPEC+ meeting showed that members are sticking together in difficult times characterized by a weakening outlook for global oil demand.

Gold reached weekly highs during Wednesday’s Asian trading session, while concerns about trade relations are driving demand for safe-haven assets.

European markets are expected to open downward on Wednesday.

___MarketEvolution8 Banks were the worst

Dow drops more than 70 points as banks lose ground.

U.S. equities fell on Tuesday, July 2. Banks were the worst after the U.S. threatened a new wave of tariffs on European products. This slowed recent optimism about the trade truce between Washington and Beijing.

The new wave of proposed tariffs comes amid a 15-year dispute at the World Trade Organization over subsidies for the planes of U.S. aerospace manufacturer Boeing and its European rival Airbus.

Citigroup shares fell 0.7%, while those of Bank of America and Wells Fargo fell more than 1% each. The SPDR S&P Bank ETF traded 1.7% below Treasury yields.

The 10-year benchmark yield was around 1.97%, while the 2-year rate fell to 1.75%.

European equities close up thanks to optimism about trade disputes

European shares rose on Tuesday, July 2, after President Trump said trade talks with China have resumed.

The Stoxx 600 pan-European index closed slightly higher. Utilities led the gains with a 2% rise, while oil and gas stocks fell 0.6% amid a sharp drop in crude oil prices.

In Europe, the focus was on debates to share out the top posts in the European administration.

PMI data released on Tuesday showed that UK construction activity suffered its biggest drop in more than a decade in June. This caused 10-year UK government bond yields to fall to their lowest level since October 2016.

The German 10-year bond yield fell to a new all-time low of -0.363%. However, it recovered helped by the weak economic data that is coming out.

German retail sales fell by 0.6% against an expected 0.5% rise.

___ContexGen_03jul

The Xi-Trump meeting went as expected

The United States and China have agreed to restart trade talks.

The United States will not add new tariffs on Chinese exports, while the Asian country pledges to continue importing U.S. agricultural products. No further details have been given.

Trump acknowledged that the talks are back on track and said he had an excellent meeting with the Chinese leader at the Osaka meeting… ‘We discussed a lot of things, we’re back on track and we’ll see what happens.’

The trade dispute has already cost companies in both countries billions of dollars and disrupted global production and supply lines.

Meeting between Trump and Kim

The president of the United States and the North Korean leader last Sunday held a historic meeting on the demilitarized border that separates the two Koreas.

Both leaders crossed the line and Trump has become the first US president to step into North Korean territory.

This brief meeting took place after Kim accepted Trump’s ‘spontaneous’ invitation a few hours earlier.

The brief meeting was charged with historical symbolism and intended to revive the dialogue between the two Koreas. As he met, Kim shook Trump’s hand as he said, 'It’s good to see you again and I never expected to see you here. Kim described Trump’s gesture as ‘brave’.

Kim also greeted South Korean President Moon Jae-in, who also went to the border.

The US president has also said that very positive things are happening on the peninsula as a result of the rapprochement between Washington and Pionyang that began last year.

In addition, the US president has said that he is going to invite the North Korean leader, Kim Jong-un, to visit Washington.

Better trade agreements than interest rate cuts

It appears that the Federal Reserve has made the right decision, communicating its willingness to cut interest rates at its upcoming meetings.

However, this will not be enough to halt the market downturn due to the trade war.

Currently, commercial relations are the most influential in the march of the markets. If China and the United States manage to reach agreements, then surely the Federal Reserve will not have to lower interest rates.

On the other hand, it remains to be seen whether the Fed would have enough resources to embark on a stimulus campaign.

Apple asks Trump not to impose new tariffs on China

The technology giant does not want its international competitiveness to be affected by further trade barriers.

Apple has asked the U.S. government to halt the approval of a new round of tariffs on imports of Chinese products. It argues that they would end up damaging its ability to compete globally with other mobile phone manufacturers.

Chinese producers, with whom we compete in global markets, do not have a significant presence in the U.S. market, so they will not suffer the impact of tariffs. Something similar would happen with manufacturers in other countries.

In a letter to the Office of the U.S. Trade Representative, the firm headed by Tim Cook has explained that the proposed tariff list covers Apple’s main products (iPhone, iPad, Mac, AirPods and AppleTV), as well as components used to repair devices in the United States.

If this new round of tariffs is given the green light, the United States will have approved taxes on 100% of imports from China.

Apple is one of the largest contributors to the U.S. public coffers, so applying tariffs on its products will reduce Apple’s contribution to the U.S. economy.

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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___MarketEvolution0

July 4, 2019

Asia-Pacific indices were mixed amid expectations of interest rate cuts

Asia-Pacific stocks were mixed on Thursday, July 4, while U.S. economic data was worse than expected. This allows the Fed to cut interest rates at its next meeting in July.

Stocks in mainland China were rising. The Nikkei 225 was slightly bullish. In South Korea, the Kospi was almost flat, while Australia’s S&P/ASX 200 was also slightly higher.

U.S. equities traded higher on Wednesday, July 3, with investors betting on a possible interest rate cut at the end of July, following the release of weaker than expected economic data.

The U.S. dollar hit a week-long low against the Japanese yen, as falling Treasury yields boost expectations of rate cuts. Attention is now focused on U.S. Non-Farm Payrolls, which will be released on Friday, and which economists expect to have increased by 160,000 new jobs in June from 75,000 in May.

European yields hit record lows after discounting that major central banks will cut interest rates to strengthen their economies.

Oil prices fell during Thursday’s Asian session, following the gains of the previous day. They were pressured by data showing a smaller-than-expected drop in U.S. crude oil inventories. Oil inventories fell 1.1 million barrels last week, according to the Energy Information Administration (EIA). A decline of 3 million barrels was expected. At the same time, the U.S. oil market continues to have an oversupply.

On Thursday gold remained stable, after reaching a week-long high. Stock market hikes compensated for the dollar’s decline and the prospect of a Federal Reserve interest rate cut.

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

___MarketEvolution7 U.S. equities traded higher on Wednesday

The Dow climbs 150 points and approaches an unprecedented close.

U.S. equities traded higher on Wednesday, July 3, with investors betting on a possible interest rate cut at the end of July, following the release of weaker than expected economic data.

Wednesday’s session ended earlier than usual due to the July 4th holiday when American markets will not open.

U.S. payrolls rose by 102,000 in June, according to ADP and Moody’s Analytics. Growth of 135,000 was expected.

These disappointing data reinforce the Federal Reserve’s argument for interest rate cuts. In addition, economic indicators are showing some deceleration in the US, so there is almost a 100% chance that the Fed will lower interest rates at the July meeting.

European shares close up after Lagarde’s appointment

European equities closed Wednesday July 3 with a sharp rise. The European Union has finally agreed the candidates to lead the bloc’s main institutions for the next five years.

The leaders of the European Union agreed on Tuesday to appoint the director general of the International Monetary Fund, Christine Lagarde, as the new director of the European Central Bank.

Eurozone bond yields plummeted and defensive stocks recovered, as Mario Draghi’s monetary policy is expected to continue.

The Stoxx 600 pan-European index provisionally closed 0.8% higher, with most sectors and all major exchanges in positive territory. Travel and leisure stocks led the gains with a 2% jump.

Deutsche Bank has had talks with Citigroup, BNP Paribas and other banks about a possible transfer of part of its business. Shares of the German lender rose almost 2.7%.

The UK economy has contracted, for the first time since July 2016, and has suffered the second sharpest drop in output since April 2009.

___ContexGen_04jul

China seems to be the winner of the Trump-Xi meeting at the G-20

The President of the United States has valued his meeting with the Chinese President Xi Jinping the weekend as much better than expected. However, political analysts claim that Beijing seems to have won the game in the trade war.

Trump and Xi agreed at the G-20 summit in Japan that they will refrain from applying additional tariffs on each other’s products and will return to the negotiating table in an attempt to reach a trade agreement.

In addition, Trump agreed to let Huawei buy U.S. products, while China will buy large quantities of U.S. agricultural products.

Trump’s softer stance on Chinese technology giant Huawei is seen as a major concession that the United States has granted to China outside all expectations.

U.S. pressures Europe

Just days after reaching a truce in the US-China trade war, the US government is now exerting pressure on Europe.

A long-running dispute over aircraft subsidies ends with the threat of additional tariffs on EU products.

The new tariffs would amount to $4 billion on European products including olives, Italian cheese and Scotch whisky.

OPEC agrees to extend production cuts until next March

The producer group overcame their differences to support a policy designed to support increases in oil prices.

The agreement is subject to approval by non-OPEC allies.

The United States is neither a member of OPEC nor a participant in the supply pact and has increased its oil production in recent years.

Washington has demanded that Riyadh extract more oil to compensate for Iran’s lower exports, after imposing new sanctions on Iran.

EU leaders give green light to Eurozone minimum agreement

The Heads of State and Government of the European Union have discussed the agreement on the reform of the euro concluded by the Eurogroup.

In particular they discussed the budget for the area of the single currency.

The ministers managed to lay the minimum foundations for establishing a budget for the eurozone. That budget would help countries finance structural reforms and investments. For now they have not been able to agree where the necessary funds will come from.

The states agree that part of the funds should come from the general budget of the European Union, but they disagree on whether this amount could be complemented with additional contributions from the countries, as requested by France and Germany.

On the other hand, the heads of state and government take note of the broad agreement on the revision of the European Stability Mechanism (ESM) treaty, or eurozone rescue fund, and ask their ministers to continue working with a view to having a complete package by December 2019.

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

July 5, 2019

Asian stocks weakens on U.S. Non-Farm Payrolls

On Friday, July 5, the Asian stock market was quiet. Markets are now awaiting the release of U.S. Non-Farm Payrolls, which could provide clues as to whether the Federal Reserve will cut interest rates during July’s monetary policy meeting.

Mainland Chinese equities were mixed in the first part of the session. In Hong Kong, the Hang Seng index rose slightly. In Japan, both the Nikkei 225 and Topix also rose slightly. South Korean Kospi traded slightly lower, with Samsung Electronics shares losing more than 1% after reporting second quarter earnings fell 56% compared to last year. Australia’s S&P/ASX 200 was up 0.51%, with most sectors showing a positive tone.

The European session was almost neutral as Wall Street was partying on Thursday, July 4th. There probably won’t be a clear direction in the markets until Monday as many traders will be on long weekends on Friday.

All eyes are on U.S. Non-Farm Payrolls, which will be released this Friday. Analysts expect them to have increased by 160,000 new jobs in June, up from 75,000 in May.

The dollar held steady on Friday, but traders were cautious about U.S. employment data that could influence the Fed’s monetary policy course. The dollar has been correlated with U.S. Treasury yields. The reaction of the bond market to the employment report will likely determine the direction of currencies.

The euro remained stable with a weekly loss of 0.75%. The fall in European government bond yields, which hit record lows this week, has affected the single currency.

The Australian dollar gained 1.4% this week, after the Reserve Bank of Australia cut interest rates.

As central bank expectations of monetary easing have increased, investors believe that the Bank of England, which until recently had given signals that its next move would be tougher, will not be able to withstand the overall pressure.

Oil prices fell on Friday as concerns about global economic growth prospects overcame high tensions in the Middle East. The geopolitical situation could disrupt supply routes and drive up prices.

During Friday’s Asian trading, gold rose sharply and recorded weekly gains. Investors were eagerly awaiting the release of U.S. labour data that could also affect the price of the precious metal.

European markets are expected to open mixed on Friday.

___MarketEvolution7 Wall Street holiday puts markets on pause

The same positive factors that the market discounted in the previous session are still present.

While the fall in US Treasury yields was negative for the dollar, the advantage of US bond yields over other countries was the minimization of the indirect effects of higher volatility.

The dollar is not falling much, compared to the fall in U.S. Treasury bill yields.

Very slightly bullish session in Europe

In fact, the session was almost neutral because Wall Street was partying on Thursday, July 4. There probably won’t be a clear direction in the markets until Monday as many traders will be on long weekends on Friday.

The positive side is that prices do not move away from the levels reached in the previous session, as the situation does not change.

It should be remembered that it is discounted that the central banks are going to have to support the economies. This has been repeated by Oli Rehn of the ECB: further stimuli will be needed in order to fulfil the mandate of the European Central Bank, which is none other than that of price stability.

The time has passed to consider that the slowdown in the economy and the slow recovery are temporary. We must recognise that this is a time of low growth.

Most supersectors are in positive, but basic resources are in negative followed by utilities.

___ContexGen_05jul

Attention focuses on U.S. Non-Farm-Payroll data

Analysts expect 160,000 new jobs to be added in June, compared to 75,000 in May.

The employment report could show a downward trend and be the lever the Fed needs to cut interest rates. The June employment report will be released at a delicate time for the economy.

Ten years after the recovery, the economy’s ability to create new jobs may be declining. Either because America is running out of workers or because the trade war may be worrying businesses.

ADP’s private sector report of only 102,000 jobs in the private sector in June lowered expectations for the official report to be released Friday.

Facebook looks at historic highs

After the increases of the last few days, the titles of the social network par excellence are placed at the gates of the resistance of the annual highs and above the historical highs.

The sensation of Facebook titles could not be better, in view of the impeccable lows and rising highs since late December.

The price is trying to overcome the resistance of its annual highs and, if it were able to close above, there would be nothing really important up to the historic highs it reached just over a year ago.

According to Trump Iran made a very big mistake

U.S. oil has risen sharply after Iran shot down a U.S. military drone.

Trump said that it will be seen if the U.S. plans to retaliate with a military attack, but said he finds it hard to believe the incident was intentional.

The downfall of the drone occurred in the midst of a confrontation between Washington and Tehran, as a result of the Trump administration’s decision to withdraw from Iran’s 2015 nuclear agreement.

The United States had also accused Iran of the recent attacks on oil tankers in the Persian Gulf region.

The tense relationship has caused crude oil prices to soar, as more than 20 per cent of the world’s oil production comes from the Middle East.

Facebook’s new currency will have nothing to do with the known crypts

A few hours before Facebook publishes the white book of its currency, nicknamed GlobalCoin, the prestigious economist Nouriel Roubini has emphasized that it has nothing to do with cryptographic currencies or blockchain.

Investors in crypts have hailed the arrival of the social network currency as a powerful market catalyst. However Roubini has pointed out that it is at the antipodes of these assets.

GlobalCoin has nothing to do with blockchain. It is totally private, controlled, centralized, verified and authorized by a small number of recognized nodes.

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

July 8, 2019

Asian equities weaken as expectations for Federal Reserve to cut interest rates decline

In mainland China, the Shanghai compound fell by 2.46% on Monday, July 8, while the Shenzhen fell by 2.55%. In Japan, the Nikkei 225 fell slightly. In South Korea, the Kospi fell by 1.69%, with Samsung Electronics shares losing more than 2%. Tokyo and Seoul remain caught in a dispute, with Japan imposing stricter restrictions on the export to Korea of high-tech materials used in screens and smartphone chips. The S&P/ASX 200 in Australia fell by 1.04%. Shares of major mining companies weakened.

The dollar rose against most currencies, reaching a two-and-a-half week high. It does so after the U.S. employment figure rose sharply in June. Non-farm payrolls rose by 224,000 last month, more than the 160,000 expected. The sharp increase follows the May slowdown.

Now the prospect is that the Fed will not cut interest rates this month. The strong result eliminates the possibility of a half-point cut in Federal Reserve interest rates at the end of July, but modest wage gains and other data, which show that the world’s largest economy is losing momentum, could encourage the central bank to cut interest rates by 25 basis points in the near future.

The euro remains under pressure, after German data showed a greater than expected drop in May and while the Economy Ministry warned that the European economy will remain weak over the next few months.

The British pound hit a six-month low against the dollar on Friday. It does so after disappointing economic data and expectations of what the Bank of England will do with interest rates.
Monday’s trading was largely unchanged as investors weighed the geopolitical risks and the impact of the China-U.S. trade war. Both oil benchmark indices fell last week, as concerns about the global economic slowdown outweighed supply risks.

Gold fell sharply on Monday after the decline of the previous session. U.S. employment data ended up dashing hopes of an aggressive Federal Reserve interest rate cut later this month.

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

___MarketEvolution10 Good employment data

Dow falls 200 points after good employment data.

U.S. equities fell on Friday, July 5, after the release of stronger-than-expected employment data reduced the Federal Reserve’s hope for an interest rate cut.

The U.S. economy added 224,000 new jobs in June. Analysts expected 165,000, after 75,000 new jobs in May.

Treasury yields jumped after the employment figure was released.

European equities fall after U.S. employment data reduces hopes of rate cuts

European equities were trading lower on Friday, July 5, after the release of U.S. Non-Farm Payrolls. The good data does not make intervention by the Federal Reserve necessary at this time.

The Pan-European Stoxx 600 fell slightly. Commodities fell 2%, while banks and retail stocks were the only sectors to trade in positive territory.

Discouraging data has also been released from German industrial orders, which added to a bad week for Europe’s largest economy.

Deutsche Bank announced on Friday that the head of investment banking, Garth Ritchie, had resigned his post. The move was expected and comes as Deutsche prepares for a radical reduction of billions of dollars in its investment banking division. Deutsche Bank shares were up 1.4%.

The vice-president of the European Central Bank, Luis de Guindos, has said that the bank keeps all the monetary policy options on the table, in order to face an economic slowdown and reach its inflation targets.

___ContexGen_08jul

Strong job rises make Dollar reach its two-week high

On Friday, July 5, the Dollar rose against most of its major currency pairs to a two-and-a-half week high. It did so after U.S. employment rose sharply in June.

Non-farm payrolls increased by 224,000 jobs last month, more than the 160,000 jobs expected. The sharp increase follows the May slowdown.

However, the moderate wage increase adds to the evidence that the economy is slowing.
The state of shock because the news, and the lack of liquidity, are enough for the dollar to be firm.

Bond yields fall to historic lows

Government bond yields, in most of the world’s major economies, have been close to historic lows. Bond yields move inversely at their prices.

German and French 10-year bond yields hit historic lows this week. Both fell into negative territory after comments from the European Central Bank and the head of the Dutch Central Bank, Klaas Knot, stimulating expectations of monetary policy easing with the aim of boosting inflation in the euro zone.

The bets that Christine Lagarde will keep monetary policy unchanged support a new momentum for the eurozone economy.

In times of uncertainty, and a challenging market environment, investors tend to shift their investments from riskier assets to others that are perceived as safe havens, such as gold and government bonds.

Brussels avoids opening infringement proceedings against Italy for its debt

The European Commission has decided not to formally ask the European Union’s economy and finance ministers to open a sanctioning procedure against Italy for not sufficiently reducing its huge public debt.

The Commission has concluded that an excessive deficit procedure, based on the debt criterion for Italy, is no longer justified.

The Community executive has taken into account the latest budgetary commitments made by the Italian government, which will allow Rome to respect in general the European rules of fiscal discipline.

Former British Minister of Economy George Osborne wants to run the IMF

The former British minister of economy wants to take the post of managing director of the International Monetary Fund and believes he can get support from Europe, the United States and China.

The former economic leader under David Cameron hopes to win the backing of Boris Johnson, if he is elected leader of the Conservative Party and British prime minister.

The post of managing director of the IMF is expected to become vacant if the current director, Christine Lagarde, receives the support of the European Parliament after being nominated as the next president of the European Central Bank.

Apparently, Osborne has commented that the Fund’s work is fascinating at a time of challenge for international institutions. She says that the current economic context requires a skilled political communicator and not a technocrat.

Canadian Mark Carney, president of the BoE, would be a possible candidate with a technocratic profile. He is well known at the IMF, having chaired the Financial Stability Board in the past.

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