Archives of “May 2019” month

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Nikkei 225 closes higher by 0.89% at 21,250.09

  
  Analysis

The Nikkei’s positive run today belies market sentiment in the region

Nikkei 17-05

Tokyo’s main index mainly jumped as Sony announced a share buyback and new partnership with Microsoft, resulting in a 10% surge in its shares – helping to lift the mood among Japanese investors. If you look over to China, the Shanghai Composite index is down by 2% now and that’s more indicative of the softer risk sentiment we’re seeing so far.

US equity futures are also down by about 0.4% so that’s continuing to put a drag on yen pairs, alongside weaker Treasury yields to start the day. USD/JPY holds at 109.64 currently, near session lows of 109.60 posted earlier.

China reportedly would rather suspend trade negotiations if US fails to show sincerity

  
  Analysis

CMP reports

US China

Citing a commentary published by Taoran Notes, a social media account affiliated with China’s state media:

“If there is no real concrete action by the United States, it will be meaningless for you (Mnuchin) to come and talk. It is better to suspend the consultation completely and return to the normal working track… The US does not show any sincerity in continuing talks… Instead, it is extending its pressure tactics. The US on one hand says it engages in talks, but on the other hand keeps using petty tricks to destroy the atmosphere for talks.”

Adding that China would not give an “effective response” to the US if Washington does not show sincerity in resolving the trade dispute between the two countries.
I would take note of the language used by China in responding, it basically shows how divided both parties are right now and that the atmosphere is growing more tense by the day. The commentary adds to the earlier report by Xinhua and is making for some uneasiness in markets as we begin the day.
The full report on the above can be found here.

China onshore weakens again today. USD/CNY above 6.9

  
Analysis, Forex

7 is thought to be a bit of a line in the sand. Not there quite yet but not far away at the pace CNY is losing ground:

7 is thought to be a bit of a line in the sand. Not there quite yet but not far away at the pace CNY is losing ground:
The PBOC has been allowing the yuan to fall. The view is the currency is not being ‘weaponised’ (i.e falling to make Chinese goods cheaper in the face of increasing tariffs).
To pop my tin hat on for a moment – that’s what China would love us to think though.
The argument supporting the PBOC not wanting it fall too far is that it will encourage capital outflow, which the PBOC is trying to keep under control.

Japan says they are staying out of the US-China trade war – won’t offer any solutions

  
  Analysis

Japan is Chair of G20 at the June summit.

They’ll be doing the gracious host thing and not offering unsolicited advice (indeed …. unsolicited advice givers are sooooo boring).
Vice Minister of Finance for International Affairs at Japan’s Ministry of Finance Masatsugu Asakawa:
  • Japan, as chair of G20, won’t intervene to seek solution to US-China trade frictions at finance leaders’ gathering in Fukuoka
  • Won’t include in G20 finance leaders’ communique language saying members will fight protectionism

Japan is Chair of G20 at the June summit.

Oil – This weekend the OPEC monitoring committee will meet

  
  Analysis

The Joint Ministerial Monitoring Committee (JMMC) meet Sunday in Saudi Arabia

  • will assess oil market conditions ahead of the full OPEC+ meeting in Vienna next month
You can expect discussion on:
  • US-Iran tensions
  • impacts on oil supply security in the Middle East
JMMC meeting will include OPEC and non-OPEC groups. Monday morning (Asia time) should bring some comments out of this.
Heads up.

Trump tells acting defense secretary he doesn’t want Iran war

  
  Analysis

Trump doesn’t want conflict to escalate into war

After being briefed on Iran developments yesterday, Trump told aides he didn’t want a military clash with Iran. He was urged to further engaged Iran but held firm.
Many reports have suggested that hawkish aides John Bolton and Mike Pompeo are pushing military options on Iran.
In a tweet yesterday he said “I’m sure that Iran will want to talk soon.”
To me, the leak is the real story here. If it’s truly a leak then that’s disgraceful. No one should be leaking comments when war is at stake, it’s borderline treason. However I’m fairly sure it’s a deliberate leak and likely from the White House. It’s meant to signal to Iran that it should negotiate because people deep in the admin want war.
Here’s the NYT report.

US Indices end higher but near mid range

  
Analysis, US Market

Above 50 day MAs for S&P and Nasdaq

The major US indices are ending the session with solid, positive gains, but off the highs and near mid range.   Nevertheless, buyers can’t be too disappointed.
Technically, the S&P and Nasdaq indices each closed above their 50 day MAs.
The final numbers are showing:
  • The S&P index rose 25.36 points or 0.89% at 2876.32. The high reached 2892.15. The 50 day MA at 2866.47.   Staying above that MA would be bullish
  • THe Nasdaq closed up 75.90 points or 0.97% at 7898.047. The high reached 7946.23. The 50 day MA is down at 7861. So it too is more bullish above that MA
  • The Dow rose 214.66 points or 0.84% at 25862. The high reached 25957
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