Análisis de mercado diario

Asian stocks are taking their cues from the mixed close in US stocks, with the S&P 500 just 16 points or 0.5 percent away from a new all-time record close. The ongoing earnings season has given equities another leg up , even as global uncertainties persist. Despite some bellwether companies missing estimates, many of the reported results show US companies faring better than expected amidst global trade tensions and the downward pressures on the world’s economy. However, noting that the downside risks are still on the table, markets may not be fully comfortable with diving head first into riskier assets, until there is greater certainty surrounding the US-China trade conflict and Brexit.

UK election adds to political risks surrounding Sterling

GBPUSD dipped below 1.28 before paring losses but is still currently weaker against most G10 and Asian currencies. Although the October 31 deadline is set to be a mere footnote in this longstanding Brexit saga, the Pound will remain sensitive to any political developments either out of Westminster or Brussels.

Given calls for a UK election, this adds another layer of political risk to Sterling’s outlook. Since surging about 6.5 percent to breach the 1.30 level, GBPUSD has moderated as markets question the justification for keeping the Pound elevated. Still, at least investors can draw relief from the diminished chances of a no-deal Brexit, which puts a sturdier floor below the Pound.

Policy continuity, economic pressures muddy Euro outlook

EURUSD is hovering just above the 1.11 psychological level, after the European Central Bank decided to keep its policy settings unchanged at Mario Draghi’s final meeting at the helm. With new President Lagarde taking up the reigns next Friday, policy continuity is set to frame investors’ outlook at the central bank, with the Eurozone economy still contending with subdued economic growth.

Germany’s manufacturing slump, as evidenced further by yesterday’s IHS Markit manufacturing PMI, continues to be a drag on the EU economy. Unless policymakers step in with substantial fiscal stimulus measures, barring a rapid dissipation of external headwinds, the outlook for the economy and the bloc’s currency remains tilted to the downside.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Asian stocks and currencies are mixed, as the post-trade truce bounce is losing steam. Investors are now weighing up their next steps after news of the “very substantial” phase one deal, as touted by US President Donald Trump. According to media reports, China doesn’t yet share the same optimism over an imminent trade agreement, with potentially more trade talks slated for the end of October.

The latest twist in the US-China trade conflict is yet another reminder to investors not to get caught up in the hype. Trying to bridge the conflicting interests between the world’s two largest economies is a gargantuan task; an undertaking that has already proven to be protracted and complicated. Considering that Gold is now edging back towards $1500 while 10-year US Treasury yields have fallen below the psychological 1.70 level, investors appear to be bracing themselves for the risk that the current pause in the US-China trade conflict could yet see another state of heightened tensions.

Brent struggling as US-China trade deal optimism fades

Brent’s stay above $60/bbl proved short-lived, with futures having declined 2.9 percent so far this week. Markets have been unwilling to  assign a geopolitical-risk premium to Oil prices, as demand-side fears continue to weigh on the global outlook.

Prices remain primarily swayed by the shifting sands of US-China trade tensions, which have already prompted multiple downward revisions to global growth and demand for Oil. Over the near-term, should the EIA data on Thursday confirm market expectations of a fifth weekly increase in US crude inventories, that could cause prices to slip further. The IMF’s world economic outlook, to be released today, is expected to add to the downcast narrative, as trade tensions continue to take their toll on the global economy.

EU leaders’ summit immediate hurdle for Brexit deal

GBPUSD is trading above the 1.26 level at the time of writing, even as the European Union Presidency tempered expectations that a Brexit deal can be struck prior to the upcoming EU leaders’ summit suggesting that Brexit talks may have to be extended.

It remains to be seen whether UK Prime Minister Boris Johnson will adhere to the Benn Act, which states that he must seek a Brexit extension if a deal is not achieved by this Saturday. A request for a Brexit extension would be a major blow to PM Johnson’s credibility, having repeatedly insisted that Brexit must happen by the October 31 deadline. Given such a context, with EU leaders and Westminster set to have their say on PM Johnson’s Brexit ambitions, Sterling traders could see a tumultuous build-up into the EU summit Thursday and Friday.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Asian stocks and currencies are gaining as risk-on sentiment courses through the markets following the US-China trade truce that was reached prior to the weekend. The increased risk appetite has dampened safe haven assets: Gold has shed about 1 percent to fall below $1490 since the trade truce was announced, the Japanese Yen is now trading above 108 against the US Dollar, while yields on 10-year US Treasuries have breached 1.70 percent for the first time since October 1. Japanese and US markets will be closed today for a holiday.

Investors are drawing relief from the US-China trade truce which staves off the immediate threat of a near-term escalation in trade tensions, given that the previously threatened US tariff hike on October 15 will be delayed. Even as investors welcome the prospects of a “very substantial phase one deal” being signed between the US and China next month, lessons learned since 2018 from watching the US-China trade conflict unfold will still guide investors’ near-term decisions. There remains the risk of markets being blindsided by a sudden spike in US-China trade tensions.

Until the deal is signed, and there’s enough compliance and follow-through that appease all stakeholders, investors can’t fully rule out the risk of another flare-up in US-China trade tensions. Such a risk warrants an air of caution among investors for the time being.

Pound breaches 1.27 versus US Dollar only to fall away, as doubts climb over Brexit deal

The latest rally in GBPUSD topped out at 1.27, around its 200-day moving average, before shedding about 0.9 percent to drop back below 1.26 at the time of writing. Investors’ initial optimism over the prospects of a Brexit deal have waned following reports that the chief EU Brexit negotiator, Michel Barnier, now deems the UK’s proposals as still inadequate.

The latest price action in the Pound reminds investors that Sterling’s gains are not guaranteed amid the lingering uncertainties surrounding Brexit. With less than three weeks remaining before the October 31 deadline, any Brexit deal must be approved by the EU leaders’ summit and the UK Parliament over the coming days. Should the Brexit deal overcome those political hurdles, GBPUSD is expected to carve a path towards 1.30, while the lower 1.20 range would come into focus if the Brexit deal hits yet another stone wall, be it in Brussels or Westminster.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Asian equities and currencies are benefitting from the feel-good mood in the markets after US President Donald Trump and Chinese President Xi Jinping agreed to reignite trade talks. The Offshore Yuan is Asia’s best performer on Monday morning, climbing 0.6 percent against the US Dollar at the time of writing. Meanwhile, safe haven assets are losing ground on the ebbing risk aversion, with Gold falling below the psychological $1400 level, while the Japanese Yen weakened by some 0.3 percent to go back above the 108 level versus the Greenback.

The US-China truce announcement staves the risk off more tariffs being imposed over the immediate term on shipments between the world’s two largest economies, giving markets the go-ahead to push further into risk-on territory for the time being.

Will US-China trade talks ultimately lead to a concrete deal?

The resumption of US-China trade talks doesn’t necessarily mean a trade deal is imminent. While an immediate deterioration in US-China relations has been averted, for now at least, the tariffs already imposed on global trade are still in effect and are expected to continue weighing on global growth.

This US-China truce may merely offer markets a temporary high, as the announcement by both governments appears to kick the can down the road. The road towards a lasting US-China trade deal remains unclear, in light of the complexities and sensitivities encountered during negotiations from earlier this year. The risk of talks falling apart, or another flare-up in tensions, could still rear its ugly head at some point in the future, blindsiding investors yet again.

The trepidatious investor will be tempted to ponder whether the same script will play out again over the coming months. In the meantime, risk assets are expected to enjoy their time in the sun, until the storm clouds of US-led tensions darken market sentiment once again.

Oil leaps at prospects of OPEC+ supply cuts extension

Brent and WTI crude are on the verge of gaining two percent respectively at the time of writing, after Russia and Saudi Arabia agreed to restrain Oil supplies through the end of 2019 at least. The pact between two of the biggest producers within OPEC+ should pave the way for an official stance by the alliance to extend the output cuts campaign, as the group’s meeting in Vienna begins Monday.

Oil prices should enjoy some immediate relief given expectations of the OPEC+ production cuts extension, along with the positive sentiment accompanying the revival of US-China trade talks. While an official extension should strengthen the floor under Oil prices, the lingering concerns over slowing global demand growth may cap Oil’s upside, unless existing US-China tariffs are lifted to brighten the global economic outlook.

Markets will also be assessing whether OPEC+ efforts to rebalance the global Oil markets may be enough, in light of record US crude output, along with the risk of another flare-up in the US-China trade conflict which could drag global growth lower.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

The relief rally led by the US-China trade war truce didn’t last long. Investors in Asia were seen taking profits from Monday’s bounce in equities. The Nikkei 225 fell by more than 1.6% with all ten sectors in the red. The ASX 200 and Kospi 200 declined by 1%. Meanwhile, Chinese stocks, which are the most closely watched by traders due to the associations with the trade tensions were flat by the end of the Asia morning session.

The bullish spirits faded so quickly amid rising doubts and conflicting messages received from top officials in the Trump Administration. Trump Tweeted that China has agreed to reduce and remove tariffs on cars coming into China from the U.S. However, neither Treasury Secretary Steven Mnuchin nor Trump’s top economic adviser Larry Kudlow were able to confirm the news. Such inconsistent messages will leave markets guessing and struggling to reach a conclusion, thus leading to volatile price action in financial assets.

Is the U.S. Treasury yield curve indicating a near recession?

While equity markets are likely continue to be driven by updates on the U.S.-China trade agreement, something of interest happened on Monday that also caught the attention of investors. The U.S. 2-year and 5-year yield curve inverted for the first time since the global financial crisis in 2007. Meanwhile, the 2-year and 10-year curve is 13 basis points away from inverting. Historically, inversions of the yield curve have preceded many of the U.S. recessions, and that’s likely to keep investors alert over the next few weeks. Although we do see signs of U.S. economic slowdown, I don’t think we’re near hitting a recession yet. What we are experiencing at this stage is expectations that the Fed is near the end of tightening policy while price inflation remains on or below target. Yesterday’s manufacturing ISM data showed activity in the sector remained strong with the index rising to 59.3 in November, well above analysts’ expectations. However, the price component of the index declined by 10.9 points, which may explain why the longer end of the yield curve is getting pressured.

Sterling out of sync

While most major and emerging market currencies rallied against the Dollar on Monday, Sterling didn’t find the needed support. GBPUSD dropped briefly below 1.27 testing its October lows. The Pound weakness reflects increasing uncertainty over whether the British Parliament will approve the proposed Brexit deal.

This ongoing uncertainty is likely to keep the currency under pressure until December 11.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.