Spain’s Ibex the one exception
The major European indices are closing the the week mostly lower. The exception is the Spain’s Ibex which rose 0.35%.
The provisional closes are showing:
- German DAX, -1.1%
- France’s CAC, -0.9%
- UK’s FTSE 100, -1.1%
- Spain’s Ibex, +0.50%
- Italy’s FTSE MIB -0.75%
For the week, the major indices or showing mixed results:
- German DAX, -0.8%
- France’s CAC -1.5%
- UK’s FTSE 100 -1.1%
- Spain’s Ibex +0.9%
- Italy’s FTSE MIB +0.3%
In other markets as European/London traders look to exit shows:
- Spot gold unchanged at $1753.80.
- Spot silver $-0.38 or -1.69% at $22.50.
- Crude oil futures $1.11 or -1.5% at $71.53
- Bitcoin $-240 and $47,520
In the US stock market, the NASDAQ index is down over 1% and leading the way to the downside. The S&P index and Dow industrial average also lower:
- Dow -202 points or -0.58% at 34549.39
- S&P index -37.35 points or -0.83% 4436.50
- NASDAQ index -161 points or -1.06% at 15021.50
Crude oil lower. Dollar buying. Yields higher. Stocks lower.
The USDCAD is moving to a new week high as crude oil moves lower, the dollar moved higher as yields move higher and stocks move lower. The combination is a negative for the CAD and a positive for flights into the USD.
The pair is currently up testing the September 9 high price of 1.27269 after moving above its 50% retracement at 1.27204 of the move down from the August 20 high to the September 3 low. A move above 1.27269, opens the door for a move toward the September 8 high at 1.27607. 61.8% retracement of the move down comes in at 1.27742.
The swing high from Wednesday at 1.270781 is now a risk level. Stay above is more bullish
Dollar buying as yields move higher and stocks move lower
The EURUSD it is testing the lows for the week reached yesterday at 1.1750 as US yields move higher and stocks move lower. The NASDAQ index and S&P index are now down -0.54%. The 10 year yield is up 3.9 basis points at 1.3700%.
The pair is now below the 61.8% retracement at 1.1757. The next targets are the swing lows from August 27 at 1.1742 and 1.17346. Below that the the pair will target the swing area between 1.1723 and 1.17264.
Rates move up
If you keep on knocking, eventually they’ll let you in.
US 10-year yields are up 4.4 bps today and once again threatening the Sept/Aug highs.
I struggle to see this breaking ahead of the weekend and ahead of the FOMC but keep a close eye on it.
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Global Times’ editor-in-chief, Hu Xijin, delivers a warning
The Global Times is a sounding board for Chinese authorities and one of the key figures in delivering key messages is via its editor-in-chief, Hu Xijin, who said on his WeChat account that Evergrande should turn to the market for any salvation, not the government.
Adding that Evergrande’s potential downfall is unlikely to trigger a systemic risk akin to that of Lehman Brothers i.e. downplaying the assumption that the company was “too big to fail” and that the government will eventually bail them out.
While not necessarily a confirmation of what to expect, it does fit with the current line of thinking surrounding China at the moment. My thoughts from yesterday:
Evergrande is the name that stands out as the poster boy for all of those worries, as the company is being made an example of the broader crackdown that China is trying to push forward with across most, if not all, major industries right now.
Don’t get me wrong. China has the tools at its disposal to easily bail out Evergrande and prop up the economy. It just isn’t choosing to do so at this moment for one reason or another, be it debt worries or just plain power consolidation
CNN with a report on new satellite images revealing North Korea is expanding a key facility capable of enriching uranium for nuclear weapons
- “likely indicate the country plans to significantly ramp-up production at this once-dormant site in the near future, according to experts who analyzed the photos.”
- Could allow North Korea to increase production of weapons-grade nuclear material by as much as 25%
- the ongoing construction is consistent with previous efforts to add floorspace at the facility, allowing it to house more centrifuges and thus, enrich more uranium
Earlier in the week NK fired off test missiles: