Equity Capital Markets

Equities Mixed Amid Headlines Driven Momentum, Macro Data Remains in Focus

Cautions rules market on fresh Brexit woes and lack of new updates on the trade deal. Macro data updates and speech from central bank figures in focus. 

Summary: Asian market saw major equities mixed and close on a positive note over lingering influence from recent positive trade deal-related headlines. However, the European market saw major indices and key stocks decline sharply. The decline in European equities was influenced by sales warning from Unilever and the latest blow from US aircraft manufacturing giant Boeing which announced its decision to halt the production of 737 MAX models which resulted in European aerospace stocks declining owing to their supply ties with the aircraft manufacturer.

The latest move by UK PM Johnson to pass a law barring extension of the transition period after Brexit by 2020 also came as a harsh blow. In the forex market, major currencies are mixed given divided investors sentiment from the global investors. 

Precious Metals: Rare metals are trading with positive bias owing to broad-based cautions investor sentiment which helped fuel demand for safe-haven assets. However, gains were capped on lingering influence from Sino-U.S. trade deal-related headlines. 

Crude Oil: Crude Oil price continues to trade positive as the outlook for global economic growth and demand for crude oil consumption remains positive over recent trade deal progress. Traders now await the latest US API weekly inventory data for directional cues. 

AUD/USD: The pair is trading with dovish bias as domestic factors continue to overwhelm AUD. RBA’s downbeat tone prompted fresh selling activity around AUD which is already pressured by firm USD and raising caution surrounding the Sino-U.S. trade deal. 

 On The Lookout: Aside from macroeconomic updates, there is very little to watch out for during US market hours today. While traders await fresh updates on Sino-U.S. trade deal, Brexit developments saw a major blow in form of a new deadline as UK PM Johnson announced plans for passing a law which will prevent extension of Brexit transition period post-2020 bringing back to tense scenario and destroying the positive momentum gained from the recent election outcome. Dovish comments from EU’s chief negotiator Barnier also added to the dovish sentiment.

Equities Mixed

In US markets hours, aside from the release of US weekly API crude oil stockpile data, the market will also see the release of US housing starts, JOLTS job openings,  industrial/manufacturing production, and building permits data while Canadian calendar will see the release of manufacturing sales data. In late American market hours, there is a speech from FOMC members Rosengren, Williams, and BOE Governor Carney. 

Equities Mixed
Eric Rosengren

Trading Perspective: Data-driven momentum will keep major forex pairs in familiar price range unless there is a major deviation from expected readings. US futures trading in the international market continued to trade positive ahead of wall street opening on trade deal optimism albeit worries about FedEx earnings and Boeing’s decision to cancel 737 MAX models affecting gains in the European session. Wall Street is likely to open positive post which headlines driven momentum will dictate directional bias. 

EUR/USD: The pair is continuing to trade positive well near weekly highs and steady above mid-1.11 handle as USD continues to remain weighed down by trade deal-related caution. Traders now await US data for short term profit opportunities. 

GBP/USD: The pair is trading with dovish bias as the latest move by UK PM took the wind out of GBP bulls causing Brexit woes to escalate once again. Traders now await US data and speech from BOE Governor Carney for short term directional bias. 

USD/CAD: The pair is back to its directionless neutral state as USD came under pressure on escalating cautions surrounding trade deal talks while CAD lost some of its support gained from recent crude oil price spike. Traders now await US and Canadian data for short term profit opportunities. 

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