Market News & Analysis

Trade talks reignite fear in global markets

Feb 8, 2019 | Market Update

Upcoming high impact economic news:

11:00 JPY Average Cash Earnings y/y
11:30 AUD RBA Monetary Policy Statement
11:30 USD FOMC Member Bullard speaks
00:30 CAD Employment change and unemployment rate

UNITED STATES

Renewed fears over trade negotiations between the United States and China weighed heavily on markets overnight. The Dow Jones fell 220 points or 0.87% while the S&P 500 slumped 25 points or 0.94%. The Nasdaq closed the session 86 points lower or down 1.18%. It follows reports U.S. President Donald Trump and Chinese President Xi Jinping were unlikely to meet before the March deadline. White House economic advisor Larry Kudlow told Fox Business the Trump administration was optimistic a deal would be reached but confirmed negotiations were ongoing. The U.S. dollar had a mixed performance to major currencies, strengthening against the Euro and Australian dollar while falling against the Yen and the Pound. Save & Exit

OIL

Equities weren’t the only market influenced by uncertainty over the trade deal. Oil prices fell to a 1-week low amid concerns the trade deal could slow demand for the commodity. U.S. Crude fell US$1.29 to close the session at US$52.79 per barrel. The price of Brent slipped from US$62.50 to US$61.60 per barrel.

EUROPE

Uncertainty over Brexit resulted in Britain’s weakest economic growth in 10 years, according to the Bank of England. The central bank left interest rates on hold at 0.75% overnight but cautioned rates would rise once a Brexit deal is done. The Pound strengthened against the Euro, rising about 30 pips. The GBP also rose marginally against the USD.
In Germany, the DAX tumbled 284 points amid concerns the economy is about to join Italy in a recession. It comes after Germany’s latest Industrial Production figures contracted -0.4%. Meanwhile, Italy’s latest round of retail sales data contracted -0.7%.

AUSTRALIA

The Australian dollar barely moved during Thursday’s session and remains weaker against the greenback, hovering around 71.02 US cents. It’s the weakest level seen in 2 weeks. The biggest driver for the currency today will be the Reserve Bank’s Monetary Policy Statement, due out at 11:30 AEDT. It will be interesting to see whether the statement reflects comments made by RBA Governor Philip Lowe on Wednesday, regarding the cash rate being “more evenly balanced.”

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