Market News & Analysis
Market Brief: It’s still mostly about trade; meanwhile, in Brazil…
Stock market snapshot as of [19/11/2019 3:02 pm]
Reduced ‘noise’ as news flow falls in step with an almost-done earnings season and looming near-end, confirm that ‘trade’ remains the key undertone for sentiment. Earlier, reports from the day before suggesting scepticism in Beijing about a broad deal being reached anytime soon were shrugged off. Instead markets focused on word that the White House would extend a license allowing U.S. companies to do business with Huawei
Markets then roughly halved gains soon after Wall Street’s open. China’s state-run Global Times noted that “Big gaps remain in China-US trade talks”. Two years after the trade dispute began, few reminders are needed that improved prospects can unravel in the time it takes to post a tweet.
Still, risk assets have also had enough time to factor cumulative tariff impact. With global central banks on an accommodative footing, absent new deterioration in other global flashpoints, there’s a case for extended gains.
Stocks/sectors on the move
- DAX was a major standout in Europe as it eyed a record high, notes Senior Technical Analyst Fawad Razaqzada. Europe’s blue-chip underperformer index, the FTSE 100, also had a day in the sun, on the back of gains by key mega-caps. Miners Rio, Antofagasta, EVRAZ, BHP backed the positive contribution from two lesser known FTSE shares
- Halma and Intertek are rivals in the industrial testing, certification and hazards field. They rose 11% and 5% respectively after Halma’s much better than forecast first-half profit and FY outlook
- Materials (propped by miners), Financials, Industrials (with input from ‘research and consulting groups’ - see Intertek) Technology, and Energy are Europe’s best-performing super sectors
- U.S. standouts on the downside kept up a sober theme for the retail sector. Lowe’s (LOW) followed, Kohl’s (KSS) and Home Depot (HD) sharply lower on poorly received earnings, outlooks, or both. KSS dropped 12%, HD -4%, LOW, -2%. It’s not all one way down Main Street though as TJX bucks the trend. It beat forecasts, boosted its outlook and bought a Russian rival for $225m. The stock pared gains into the open however as investors scrutinised ‘holiday’ quarter guidance and found them to be cautious
- See our earnings preview for key U.S. retailers by Head of Research Matt Weller
FX snapshot as of [19/11/2019 3:02 pm]
View our guide on how to interpret the FX Dashboard
FX markets and gold
- Meanwhile: Brazil’s lira nears a record low, spotlighting another Latin American economy under pressure (see Venezuela, Argentina and others). Ironically, there’s a dearth of drivers in Brazil itself. BRL selling is being precipitated by unrest in related and proximal regions. The central bank is heard offering spot in exchange of long dollar, ahead of scheduled comments from its president
- Currency havens are leading the losers, whilst Treasurys also retreat. The dollar index attempted to break higher for a spell with key majors on the backfoot, though ex-USD has since regained poise
- Aussie is among the worst G10 performers after minutes of the RBA’s recent policy meeting revealed rate setters had considered another cut
- Sterling looks a lot more hesitant than on Monday, ahead of a TV debate between the Conservative’s Boris Johnson and Labour’s Jeremy Corbyn
- Senior Technical Analyst Fawad Razaqzada adds: The risk-on tone is also evident in FX, with the risk-sensitive New Zealand dollar being the strongest and safe-haven Swiss franc the weakest at the time of writing
- News that the US President Donald Trump “protested” to the Fed’s Jay Powell that he should consider lowering interest rates in par with other developed countries was also greeted with cheer
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.