U.S. stocks swung between small gains and losses Thursday as upbeat data on Americans' spending habits helped to ease investor fears about a coming recession. The Dow Jones Industrial Average rose 25 points, or 0.12%, a day after the blue-chip index slid 800 points--its biggest decline this year. The S&P 500 added less than 0.1%, and the Nasdaq Composite slipped 0.2%. US / China trade concerns took a breather.
Mounting signs of a global economic slowdown hammered stocks and drove demand for sovereign bonds to such an extent that shorter-term yields rose above long rates in the U.S. for the first time since 2007.The S&P 500 sank 2% as the inverted gap in rates for 2 and 10-year Treasuries flashed a warning that has normally preceded a recession . European shares plunged after Germany's economy contracted in the 2nd quarter, adding to angst fueled by weak Chinese retail and industrial numbers. The British yield curve also inverted for the first time since the financial crisis and the pound edged higher after inflation unexpectedly rose. Government bonds rallied across Europe. The warning emanating from bond markets spooked investors already seeking shelter from the fraught geopolitical climate and the impact of the global trade war just a day after equities rallied on a tariff reprieve from President Trump. While curve inversions normally precede economic turndowns, they do not necessarily signal imminent doom.
U.S. stocks rallied after the Trump administration said it will delay tariffs on some Chinese goods until December, while Treasuries fell after a pickup in inflation dented arguments for cutting interest rates. The S&P 500 Index spiked higher after trade officials named a broad swath of consumer goods that would be spared from tariffs at the current Sept. 1 deadline. Apple and Caterpillar surged more than 4%, while makers of computer hardware and chips pushed the Nasdaq 100 higher by 2%. Oil surged, the dollar strengthened and gold plunged. The trade headlines sparked demand for risk assets that had been under pressure for more than a week as investors grew increasingly concerned the spat with China would slam global growth. Rising tension in Hong Kong and Argentina had added to the poor sentiment. The narrowing of the yield curve kept gains in check, as the recession signal emanating from the bond market grew louder
U.S. stocks slid and Treasuries rose as political unrest in Hong Kong hit markets already on edge over trade tensions. Argentina's peso sank 15% after voters turned on the president in a primary vote. The S&P 500 Index fell back toward 2,900 and is now off 2.5% in August. The overnight session turned sour when authorities closed Hong Kong's airport and a Chinese official said the city was at a "critical juncture." The Stoxx Europe 600 Index erased a 1% advance. Argentina's credit default swap spread spiked higher as investors price in a far greater likelihood of a default. Emerging-market assets slumped. The weakness in stocks fed demand for haven assets, pushing the 10-year Treasury yield lower and boosting the yen for a 4th day. China's central bank fixing continued to signal its determination to manage an orderly depreciation. Italian bonds led gains in European debt after Fitch affirmed the country's credit rating on Friday. The pound strengthened following 3 sessions of declines. Monday's reversals provided another reminder of the fragile mood across markets as it extended the tumultuous start to August. Gains for the safest government bonds show lingering caution by traders who've increased bets for central bank easing in recent weeks, as the U.S. and China escalate their trade war and a slew of global data point to slowing growth.
Yesterday, USDCAD erased Wednesday's gains with a drop from 1.3314 down to 1.3221. Positive market sentiment, higher commodity prices, and lower U.S. yields saw the USD broadly weaken. Trump was also noted commenting on the strength of the USD. USDCAD was holding near session lows at 1.3210 this morning when the Canadian employment data was released. Weaker than expected data saw USDCAD quickly move up to 1.3275. The move higher was short-lived and the pairing dropped back to new session lows at 1.3205. We have since seen a brief rally to 1.3244 follows by a decline to 1.3220. Oil prices have surged while U.S. 10 year yields hold near 3 year lows. Trump mentioned today that he would like to see the Fed lower interest rates by 1%. Markets are now pricing in a 46% of 2 more interest rate cuts and a 36.7% of 3 more cuts by the end of this year.
U.S. stocks opened higher Thursday as stronger-than-expected Chinese trade data and upbeat indicators in Europe eased concerns about a sharp deterioration in the global economic outlook. Thursday's stock moves follow a bout of market volatility, highlighting uncertainty about how the trade and currency battle between the U.S. and China will play out. U.S. stocks whipsawed Wednesday, with the Dow swinging more than 600 points at its widest span before closing almost flat. Elsewhere, the benchmark Stoxx Europe 600 index rose 1%, led by gains in the technology and oil-and-gas sectors. In Asia, the Shanghai Composite Index climbed 0.9%. Feeding into the sense of relief was an unexpected turnaround in Chinese exports, which climbed 3.3% in July from a year earlier. In addition, the Bank of France's July business survey indicated an acceleration in growth in the eurozone's No. 2 economy. Economists at Daiwa Capital Markets called that report, "arguably as upbeat as might have been hoped".
U.S. equities slumped and bonds rallied globally after a series of dovish central-bank surprises underscored escalating concern over the outlook for growth. The S&P 500 Index's loss approached 1% in heavy trading volume as the 30-year Treasury yield closed in on an all-time low. German rates dropped to a record as industrial production registered the biggest decline in almost a decade. Currency markets were volatile after policy makers cut rates in New Zealand, India and Thailand. Traders are selling riskier assets after this week saw the biggest one-day plunge in global equities since February 2018, fearing an escalation in the trade war will spur a global recession. Threats of expanded tariffs are also creating uncertainty in corporate boardrooms, spurring concern there will be a pullback in capital outlays and a drop in company earnings with central banks lacking the firepower to buoy growth. As fears of a global rush to devalue increased, New Zealand's dollar tumbled after a bigger-than-expected rate cut, and Australia's dollar dropped to a decade-low on bets its central bank will follow suit. The yuan dipped after China set its reference rate slightly weaker than expected. India's rupee and the Thai baht slipped. The U.S. dollar was steady, while the yen gained and gold rallied toward $1,500 an ounce. The dovish moves by three central banks underscore the global shift toward easier policy even after the Federal Reserve's unexpectedly hawkish stance last week. President Donald Trump again on Wednesday urged the Fed to ease policy, saying in a tweet that "They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW."
U.S. and European stocks clawed back some of their recent losses after China moved to stabilize its currency, providing a respite for investors stung by an escalation in trade tensions.The S&P 500 Index rose as much as 1% while manufacturing shares led the Stoxx Europe 600 higher as China fixed the yuan at stronger than 7 per dollar, the level that spurred a global sell-off Monday. The dollar steadied and gold held near a six-year high, while Treasuries gave back some of yesterday's surge, when they reached the most extreme yield-curve inversion since the lead-up to the 2008 financial crisis
Garo Mavyan | Retail FX & Precious Metals Trader
After continued attempts and unending failures to secure Brexit, the embattled Theresa May has finally relinquished her post as Prime Minister to make way for a successor, Boris Johnson. Johnson, who became Prime Minister in late July, must now continue negotiations with the European Union to deliver Brexit before the impending October deadline this year. However, he is seen as a controversial figure, and is one of the most ardent Eurosceptics in British politics. Last year, he proudly resigned from May's government in protest to her handling of the negotiations. It therefore comes as no surprise that during his short reign, he has renewed tensions with EU leadership in Brussels and has sent the markets spiraling closer towards a state of total panic.
Yesterday, USDCAD initially climbed from 1.3194 up to 1.3249 – a 6 week high before falling to 1.3182 as equity markets erased the bulk of the post-Fed sell-off. In the late morning, Trump surprised the markets by announcing another tariff on China – 10% on $300 billion worth of goods. Equity markets and oil prices tumbled (the DJIA dropped over 600pts after having climbed more than 350 pts while oil fell 7.5%) sending USDCAD back up to 1.3243. The move was short-lived with the pair settling near 1.3210. USDCAD climbed back to 1.3240 in early morning trade ahead of the U.S. jobs data which came in largely as expected. Wage inflation data was touch higher while there was a negative revision to prior data (41,000). USDCAD moved marginally higher to 1.3266 but has fallen back to 1.3220 amidst broad-based USD weakness. Equity markets continue to tumble while U.S. 10 year yields have fallen to 1.87% - near 3 year lows. The probability of another U.S. interest rate cut in September has climbed to nearly 100%.
U.S. stocks rose as traders digested better-than-expected corporate earnings and awaited Friday's jobs report for clues on the economy's strength after the Federal Reserve first rate cut in a decade. Treasuries rose and the dollar pared gains after key factory data disappointed. The S&P 500 rose for the first time in four days after sinking the most in two months when Chairman Jerome Powell signaled additional cuts are not guaranteed. Attention now turns to Friday's nonfarm payrolls data. General Motors Co. rallied after results beat analysts estimates, while tech lead gains as the FAANG cohort of megacap companies all advanced. The greenback pared gains, and 10-year Treasury yields slipped below 2% after a measure of U.S. manufacturing missed, but still pointed to expansion. The pound weakened, extending its losing streak, after the Bank of England left interest rates unchanged. West Texas oil fell below $57 a barrel.
U.S. stocks fluctuated as investors digested earnings and the end of the most recent trade talks with China. The negotiations between Chinese and American officials ended without much of a sign of headway also weighed on sentiment, but the 2 sides did agree to continue discussions. The U.S. Fed will announce its interest rate decision today at 11am, where they are widely expected to cut rates by 25bpt. Current markets have already priced in this anticipate cut. Chairman Jerome Powell's post-meeting press conference at 11:30am will be key, as markets participants assess the outlook for growth and the prospect of additional cuts this fall. Markets are currently pricing about a 90bpts in Fed cuts over the next 12 months.
Whatever shred of optimism markets had about the ongoing trade negotiations were dealt as a severe blow when President Trump flew off the handle again at China for not buying American agricultural products.
Following another month of escalating tensions, agreement on practically anything would have been viewed positively, but I think you can throw that view out the window. As far as reaching any middle ground, something that China has been demanding in these trade negotiations all along, with the US economy doing well and equity markets at record highs the Whitehouse would be less likely to meet China halfway. President Trump has probably resigned himself the fact that China might roll the dice on the US 2020 election hoping for a more trade compromising Democrat to be voted into power.
The USD/CAD pair traded with a mild positive bias on the first day of a new week and remained well within the striking distance of one-month tops set on Friday. The pair built on its recent recovery from yearly lows and got an additional boost on Friday following the release of stronger-than-expected US GDP report, showing that the economic growth stood at 2.1% annualized pace during the second quarter of 2019. The positive momentum, however, faltered near the 1.3200 handle, though the pullback turned out to be short-lived, rather was quickly bought into at the start of a new trading week amid the prevalent bullish sentiment surrounding the US Dollar. This coupled with a modest pullback in crude oil prices further undermined demand for the commodity-linked currency-Loonie and remained supportive, with bulls now eyeing a sustained move beyond the 1.3200 round figure mark. Given that the Fed is likely to refrain from announcing any aggressive monetary policy easing at its upcoming meeting on July 30-31, a convincing breakthrough the mentioned handle will set the stage for an extension of the recent appreciating move.
Yesterday, USDCAD initially declined from 1.3145 down to 1.3115 before climbing to hold a 1.3152 – 1.3167 range for the balance of the day. Overnight, USDCAD climbed to 1.3188 before extending to 1.3195 after U.S. 2nd quarter GDP data came in better than expected. The pairing dropped to 1.3175 before a 2nd wave of buying tested the 1.3199 level (a new 1 month high). That was short-lived as USDCAD has since pulled-back towards 1.3175 again. The probability of a 50 basis point interest rate cut at next weeks Fed meeting has declined from 60% down to 21% since last Thursday.
U.S. stocks fell amid a torrent of corporate results, while the euro rallied and European government bond yields lingered near record lows as the region's central bank signaled the need for significant stimulus as its growth outlook deteriorates. The S&P 500 dropped from a record and the Dow Jones Industrial Average eased for a second day as investors digested a flood of earnings. 3M advanced after beating estimates, while Tesla plunged on weak results. Ford slumped as the gloom in the global auto industry spread. PayPal dropped and Dow was flat after results. Amazon and Alphabet highlight after-hours reports. The euro rose versus the dollar and Treasuries fell after Mario Draghi left rates unchanged but said a "significant degree" of monetary stimulus is appropriate.
The USD/CAD pair traded with a mild positive bias for the fourth consecutive session on Wednesday and is currently placed at session tops, just below mid-1.3100s. After the previous session's late pullback from near one-month tops, the pair managed to regain some positive traction on Wednesday, albeit a combination of diverging forces failed to provide any meaningful impetus. The US Dollar stood tall near five-week tops and remained well supported by the fact that investors continued scaling back expectations of a 50 bps rate cut by the Fed at its upcoming monetary policy meeting on July 30-31.
U.S. stocks rose as investors assessed a batch of strong earnings and signs of progress in trade talks with China. Treasuries fell and the dollar rose. Optimism was also helped by a possible deal on the U.S. debt limit with an initial bipartisan agreement to raise it and thusly remove another layer of uncertainty for the markets moving forward.
Technology shares led gains among U.S. stocks following a mixed session in Europe and Asia as investors looked ahead to a busy week of corporate earnings. The Dow Jones Industrial Average turned negative. Stocks slipped throughout Asia, led by declines in Shanghai and Hong Kong as traders watched escalating tensions there. Treasuries advanced after traders pared bets the Federal Reserve will slash rates by a half-point this month. Oil rose again, heading for its biggest gain in more than a week, after Iran's seizure of a British tanker fanned concerns of a confrontation that could disrupt Middle East supplies. Core European government bonds gained, while the pound slumped after a forecast showed Brexit may have already pushed the U.K. into a technical recession, and as Conservative Party members vote on a new leadership. Investors will be eyeing earnings this week for signs of economic slowdown and any indication that trade strife is affecting companies' bottom lines. On the trade front, Chinese state media reported face to face negotiations with the U.S. may resume soon. The Fed meanwhile, is in a blackout period with regard to policy communications ahead of next week's interest rate decision.
Yesterday, USDCAD initially declined from 1.3060 down to 1.3041 before climbing to 1.3095 – a 1 week high. The pairing then declined to 1.3016 in late trade – the lowest since Oct. 24, 2018. The broad USD declines came after several dovish comments made by NY Fed member Williams. The probability of a 50 basis point interest rate cut at the upcoming FOMC meeting jumped from 34% up to 59%. The New York Fed issued a statement overnight back-tracking some of the comments and the USD broadly recovered although USDCAD held near 1.3030 for much of the overnight session. Canadian retail sales for May came in weaker than expected sending USDCAD from 1.3050 up to 1.3110 – an 8 day high and a break above recent resistance at 1.3090/95. The move was short-lived with pair falling back to 1.3066 despite the USD holding its gains elsewhere.