News & Analysis

Overnight on Wall Street: Tuesday 08/10/19

October 8, 2019

By Deepta Bolaky
 @DeeptaGOMarkets

Equity Markets

Risk sentiment remains fragile on Wall Street as trade talks between China and the US are looming. The impeachment inquiry into President Trump and the surprise decision to pull US forces out of north-eastern Syria are also denting sentiment.

Unlike the European markets which finished the day in the green, Wall Street ended lower and major US equity indices were down by 0.3% to 0.5%.

As a slew of economic data is flashing warnings on the global slow growth, investors will look for clues from central banks while still closely monitoring trade talks. Protectionism measures have fueled the magnitude of slow growth, and traders are in search of some developments on the trade front.

After the close of the New York markets, it was reported that the US blacklisted eight Chinese companies, including Hikvision based on human rights violations. The move may escalate tensions between the two countries ahead of the trade talks later this week.

Currency Markets

The FX market is mostly driven by trade-related headlines. Some positive comments are emerging from Washington and Beijing concerning the trade talks, but the lack of commitments on the Chinese industrial policy or government subsidies are preventing traders to push risk currencies higher.

Major currencies were mostly weaker against the US dollar. The greenback is swinging alongside and traded close to the 99.0 level on positive trade headlines.

Source: Bloomberg Terminal

In the emerging markets, Turkish Lira was the worst performer against the greenback. The recent news on the Syrian operations caused the Lira to fall the most since August.

  • Turkey will soon be moving forward with its long-planned operation into Northern Syria.
  • The US Armed Forces will not support or be involved in Turkey’s Northern Syria operation and will no longer be in the immediate area following the defeat of ISIS.
  • Turkey will now be responsible for all ISIS fighters captured in the area over the past 2 years.

The US has also warned Turkey in a tweet against acting in excess in a military operation targeting Kurdish forces in Syria.

As of writing, the USD/TRY is trading in the 5.80 level.

USDTRY (Daily Chart)


Source: GO MT4

Commodities

The bearish pressure in the oil market persists as trade wars and weak economic data cast doubts on the demand outlook for energy. However, supply issues provided some support to the oil market on Monday. The unrest in Iraq, the second-largest producer of oil among OPEC members could cause disruptions in oil exports.

As of writing, the WTI and Brent Crude are trading slightly higher in the vicinity of $52 and $58.

UKOUSD and USOUSD (Hourly Chart)


Source: GO MT4

Gold failed to rise above the $1,500 amid a rebound in the US Treasury yields. Buyers are weighing the different trade-related headlines before pushing the yellow metal decisively above the key psychological level of $1,500.

As of writing, the XAUUSD pair is trading at $1,492.

XAUUSD (3-Day Chart)


Source: Bloomberg Terminal

Key upcoming events

BRC Like-For-Like Retail Sales and BoE’s Governor Carney Speech (UK)
Overall Household Spending (Japan)
Caixin Services PMI (China)
Unemployment Rate (Switzerland)
Industrial Production (Germany)
Producer Price Index (US)

Wednesday, 09 October 2019
Indicative Index Dividends
Dividends are in Points
ASX200 WS30 US500 US2000 NDX100 CAC40 STOXX50
0 4.171 0.912 0.029 0.128 0 0
ESP35 ITA40 FTSE100 DAX30 HK50 JP225 INDIA50
0 0 0 0 0 0 0
  

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