Archives of “June 4, 2019” day

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European shares end the day with mixed gains (but gains)

  
Analysis, Global Indices

US stocks or near session highs.

The European shares are closing the day with solid gains. There is less trade worries today and short/hedges are being squeezed a bit.

The closes are showing:

  • German DAX, +1.5%
  • France’s CAC, +0.5%
  • UK’s FTSE, +0.4%
  • Spain’s Ibex, +1.1%
  • Italy’s FTSE MIB, +1.7%

The US stock market is also positive today and near session highs as London/European traders look to exit:

  • S&P index +44.14 points or 1.61% at 2788.60. The price moved back above its 200 day moving average at 2774. The 100 day moving average is currently at 2800.
  • Nasdaq is up 150 points or 2.05% at 7483.40.  It remains below its 200 day moving average at 7519.39.
  • The Dow is up 427 points or 1.71% 25244.

In the European debt markets, the benchmark 10 year yields are ending mostly lower but off the lowest levels (UK yields moved higher today).

US stocks or near session highs.

In the forex market, the AUD is now the strongest currency. The GBP was the strongest at the start of the day. The JPY is the weakest (on the back of higher stocks basically).  For the USD, the sum of the % gains (EUR, JPY and CHF) and the % losers today (GBP, CAD, AUD and NZD) is equal to 0.0%. The dollar is perfectly mixed with some gains and some losses.

Bitcoin back below $8000. Reached $9090 last week

  
Analysis, BITCOIN

The digital currency is in the $7450 to $8400 range

The price of bitcoin is trading back below the $8000 level today after a plunge that took the price from around $8500 to $7700 in the first few hours of trading today. Since then, the price is waffling mostly below the natural $8000 level.
The digital currency is in the $7450 to $8400 range
The move today brings the digital currency back into a $7450 to $8400 range.  From May 13 to May 27, the price traded 12 of 14 days in that range (there were two days when the price traded below the $7450 low).  The 100 hour MA is at $8456 and moving lower.  That should be a risk/bias defining level now for the currency.  Move above, and this tumble is just a normal correction.
On the downside, should the price be able to stay below the $8000 level, I would expect buyers near that $7450 low ($7500 sounds like a nice round level to buy against).  By the way, the 38.2% of the move up from the April 26th low comes in at $7513.49.  That increases the areas importance IF there is a dip.
Bulls in Bitcoin, can call these dips as opportunities to load up and also necessary evils if the price is to go higher and higher and higher.  They need the naysayers to get offsides and be forced to cover on the squeezes higher.
Whether it pans out that way or not, I don’t know, but what I do know is if the $7500 area holds, the bulls are still more in control, and a break of the 100 and 200 hour MAs above (blue and green lines) would also be good for the buyers/bulls.  If broken the $9090 high from last week would be on traders radars as the next key upside target.

Global Times editor: China convinced fair talks impossible without a thorough fight

  
  Analysis

Comment from Hu Xijin

China softening the stance? This is a useless speculation. Beijing is willing to negotiate but now is very much convinced fair talks are impossible without a thorough fight. The Chinese realized they were a bit naive before, believing trade talks can yield good results.
Hu has become a bit of a spokesman for China in the English media. He’s been right lately and it’s tough to imagine this is speculation on his part. More importantly, this doesn’t sound like China believes that something better is coming any time soon. They’re getting ready for it to get worse.

South African economy suffers worst slump in a decade

  
Analysis, Economy

South Africa’s economy suffered its largest slump in a decade during the first months of the year, as severe blackouts at Eskom, the struggling state power utility, took their toll.

Output in Africa’s most industrialised nation dropped by an annualised 3.2 per cent in the first quarter, its largest quarterly fall since 2009, according to official statistics on Tuesday.

The decline contrasts with growth of 1.4 per cent during the last quarter of 2018, and was worse than the 1.4 per cent contraction that economists expected.

The rand dropped 1 per cent against the US dollar after the release.

The contraction will underline a failure by President Cyril Ramaphosa’s ruling African National Congress to fix Eskom, which imposed the country’s worst ever rolling blackouts during the first quarter.

Eskom is buckling under more than $30bn of debt, breakdown-prone power stations and rampant corruption that is a legacy of misrule under the former president Jacob Zuma.

Power-intensive industries such as manufacturing and mining recorded the biggest drops in activity in the quarter.

Mining activity fell by more than 10 per cent while manufacturing dropped 8.8 per cent.

Eskom generates nearly all of South Africa’s electricity but has failed to maintain its ageing coal plants while spending billions of dollars on faulty new stations.

Since the blackouts peaked in March, the utility has gradually recovered its ability to generate power, but its finances remain precarious. Eskom received a $5bn state bailout in February but has since needed further emergency cash to pay debts.

Mr Ramaphosa has announced a plan to break up the utility’s monopoly into smaller state-owned firms but this faces resistance from the ANC’s trade union allies.

Heads up: US Fed chair Powell due to speak later today

  
  Analysis

In case you didn’t already know that is

Powell

Powell is scheduled to make an appearance later today at 1355 GMT where he will be speaking about the Fed’s policy strategy, tools, and communication practices at an event hosted by the Chicago Fed.

With plenty of attention and market focus being turned towards the Fed rate cut debate, this could be the platform where Powell can give us a clear indication of what to expect in the coming months from the Fed.
The dollar is starting to weaken again in the past half hour following a more steady session but let’s see what Powell has to offer before running away with any conclusions. It’s been a complicated trading day so far with equities gaining some ground and Treasury yields recovering but it doesn’t have any feeling of a risk-on play here. The fact that the dollar has been bouncing back and forth isn’t helping as well.

China says it is clear that every setback in trade talks is due to US breaking consensus

  
  Analysis

Comments by China’s foreign ministry

US China
  • Says that US argument on trade white paper makes no sense
  • Urges US to read trade white paper properly
  • Says that US statement is shifting blame towards China, who is innocent
There isn’t much doubt that both sides are still very far apart from reaching any compromise and with tariffs still on the table, there is very little chance of that happening now.
It has turned into a battle of egos and both countries will surely not back down. Expect the current frosty relation to continue for many more months at the very least. This is merely just the beginning…

Nikkei 225 closes lower by 0.01% at 20,408.54

  
Analysis, Global Indices

Tokyo’s main index closes at flat levels on the day

Nikkei 04-06

Sentiment remains cautious for the most part but Japanese stocks settled near unchanged levels after weighing between softer risk sentiment overnight along with more decent tones in trading today. US equity futures are up by around 0.1% while Treasury yields are also higher as we begin the session.

That said, it hasn’t translated into much meaningful movement in currencies as the search for direction continues amid the flurry of volatility. Although bond yields are faring better today, I can’t help get the sense that it could all be wiped out in a blink of an eye.

Economic data coming up in the European session

  
  Analysis

Preliminary Eurozone CPI data for May in focus today

Comic 04-06
Good day, everyone! Hope you’re all doing well as we look to get things going in the session ahead soon enough. Markets are mostly steady to begin the day as the focus now turns to the RBA June monetary policy decision, where the central bank is expected to cut its cash rate by 25 bps from 1.50% to 1.25%.
There isn’t much on the economic calendar in terms of releases today but of note we have more inflation data from the euro area along with RBA governor, Philip Lowe, who will be speaking at 0930 GMT at the central bank’s board dinner (questions from the audience are expected). Eamonn gave a heads up on that earlier here.

0830 GMT – UK May construction PMI
Prior release can be found here. Construction activity in the UK remains rather subdued in light of Brexit uncertainty and the print here should just reaffirm that notion. In any case, it shouldn’t be a relevant factor for the pound in trading today; barring any major surprises.
0900 GMT – Eurozone April unemployment rate
Prior release can be found here. Labour market conditions are still expected to hold tight so there won’t be much to gather from the release here.
0900 GMT – Eurozone May preliminary CPI figures
Prior report can be found here. Following the Easter bump in April, inflationary pressures are expected to tone down in May and the readings here should very well reflect that sentiment. It’ll be hard to really zoom into anything as the drop is more related to the fading of Easter seasonality, so we’ll have to wait on June readings to really get a grip on the region’s inflation outlook/trend in the coming months.
That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading!
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