The FOMC meeting on Thursday will clarify whether the correction of the global stock market may disrupt the Fed's plans to raise interest rates again in December – and then three more times in 2019. And the introduction of US sanctions on Iran on Monday -market. will provide a firmer understanding of the extent to which Iran's removal from global markets will have an impact on oil prices.
3. Risk of European and Asian events: Looking beyond the trials and tribulations of financial markets in the United States, there have been promising signs of major breakthroughs in relation to Brexit and the US-China war. The news reports over the weekend warmed up the idea that a Brexit deal could be negotiated until November 21. The reports suggested that Prime Minister Therese May is moving towards an agreement that would allow the UK to remain in the European customs union. – possibly alleviating many of the Irish border concerns.
With regard to the US-China trade war, markets have been reinforced by reports that – as contradicted by some White House members – President Trump, after his "long and very good conversation with Chinese President Xi Jinping," instructed cabinet to draw up a trade agreement with China
4. NFPs and US Fundamentals: The prospect of resolutions for several of the world's top economic and geopolitical issues supported investor sentiment on Friday but proved inadequate to sustain the stock market's turnaround of the week over the week's most significant economic release: Non -Farm Pay. The data reaffirmed that the US economy is still growing, printing 250,000 jobs better than expected (against a forecast of 190,000) – a figure strong enough to keep the unemployment rate at 3.7% despite of the escalation in participation. rate.
As it always stands out, with the US economy having been for nominally full employment time, it was the number of wage growth that worried market participants: in what represents the highest wage growth since the GFC, the data showed that wage growth had an annualized base of 3.1 percent.
5. The Fed and US rates: Strong US labor market numbers were a strong reminder to market participants that with the US economy so heated, the subsequent signs of a price pressure could cause US Federal Reserve interest rates become a matter of choice. absolute necessity. Interest rate markets immediately reflected this, pushing the Fed's December rate increase bets back to 80 percent.
The US dollar's dynamic bid was higher, triggering self-liquidation in US Treasuries, raising Benchmark US Treasuries' yield by 8 points to 3.21%. US stock markets were dragged down by this NASDAQ-led move, which, coupled with losses after Apple Inc.'s results, contained a narrowing of earnings guidance to 1.04% lower.
6. Global monetary stock: The perception that US interest rates could rise on a steeper than expected trajectory pushed the EUR and Pound down, which fell below 1.14 and 1.30 respectively, before the currencies recovered because of Brexit's optimism.
Solid gains made by the AUD / USD, which rose during the Asian trade above 0.7240, due to the high hopes of an imminent US-China trade agreement, were devalued, dragging the dollar back to 0.7200. The CAD fell together with our local unit, although some of the losses in relation to the latter were a consequence of the considerable fall in the price of oil to US $ 72.00 per barrel (in Brent Crude terms).
The yen also declined, as did the Swiss franc, proving the condemnation behind the dollar's entry. While the only currency that actually held its rally against the US dollar was the Chinese Yuan, with the currency remaining at level 6.89 under the belief that China's policy makers have what it takes to sustain and stabilize a slower Chinese economy. Stronger confidence in China's markets also spurred an increase in emerging market assets: the MSCI Emerging Market index rose to its highest level in 30 days.
7. ASX200: SPI futures are indicating a 5-point drop in the open for ASX200 after a Friday that brought a mixed day to the ASX200 as well as to the Asian region.
Confidence that China has the strength to stimulate slower economic growth, coupled with the prospect that a US-China trade agreement can be reached, has raised the CSI300 by 3%, and the materials sector in the local stock market higher. The material space was mainly responsible for the 0.1% gain of the ASX200, only marginally offsetting the 0.38% drop in the financial sector.
It will be a dichotomy that can dictate trade once again today and in the early stages of the weak, after auction release rates have shown more signs of weakness in the domestic real estate market. The softness potential in bank stocks, combined with various RBA-related event risks, and the still uncertain global scenario, can test the positive share price witnessed on the ASX200 this week, which gallantly struggled to close last week's trade of 5930 support / resistance, and to show preliminary signs of a recovery of the October market correction.
8. Market surveillance:
SPI futures fell 5 points or 0.1% to 5811 at 9:00 am in the EDA
AUD -0.1% to 71.97 US cents
On Wall Street: Dow -0.4% S & P 500 -0.6% Nasdaq -1%
In New York, BHP -0.9% Rio + 0.1% Atlassian -0.4% Apple -6.6%
In Europe: Stoxx 50 + 0.3% FTSE -0.3% CAC + 0.3% DAX + 0.4%
Spot gold flat for $ 1232.89 in New York
Brent -0.4% to US $ 72.58 a barrel
US oil -1.3% to US $ US62.86 per barrel
Iron ore -1.7% to US $ 73.97 per ton
Dalian iron ore -0.5% to 508.50 yuan
Aluminum LME + 0.4% to US $ 1,973 per tonne
LME copper + 3.2% to US $ 6283 per ton
Yield 2 years: USA 2.90% Australia 2.02%
Yield 5 years: USA 3.03% Australia 2.23%
Yield 10 years: USA 3.21% Australia 2.69% Germany 0.42%
10-year yield differential in the USA and Australia: 52 basis points
This column was produced in a commercial partnership
between Fairfax Media and IG