stock market morning report

US China Trade Deal Leaves Investors Creates Another Ground Hogs Day

The markets are beginning to resemble “Groundhog’s Day” as investors are again focused on US-China trade negotiations with the market bouncing backing and forth with a positive macro trend. At the end of last week, the market began to receive positive signals again. White House economic adviser Larry Kudlow said Washington and Beijing are still close to a deal. On Saturday, according to the Chinese Xinhua News Agency, Vice Premier Liu He, US Trade Representative Robert Lighthizer and Finance Minister Stephen Mnuchin held “constructive talks” over troublesome trade issues over the telephone and agreed to stay in close contact. Even the conclusion of a limited trade agreement between the leading economies of the world can reduce the pressure on the global economy and increase demand.

Today, oil prices are being corrected downwards. The current decline in quotes is likely to be corrective after significant Friday growth, due to positive comments by US officials and the Baker Hughes report. Economic adviser Larry Kudlow said the PRC and the US are still close to signing the initial deal, and the Baker Hughes report showed a new reduction in active US rigs from 684 to 674 units.

Eurozone

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EUR is strengthening against USD and JPY but weakening against GBP.

Due to a lack of significant European economic releases, EUR movement is stimulated by external factors. EUR is strengthening due to positive signals on the US-China trade negotiations, which, according to the comments of the economic adviser to the US administration Larry Kudlow, are close to completion. The conclusion of any deal is vital to the global economy, the state of which continues to deteriorate under the pressure of trade wars. So, earlier the WTO reduced the forecast for the growth of world trade to the lowest level in the last ten years. This year, the indicator can grow by only 1.2%, and next year – only by 2.7%.

United Kingdom

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GBP is strengthening against its main competitors – EUR, USD, and JPY.

Due to a lack of significant economic releases, the attention of British investors is focused on parliamentary elections. GBP is supported by the fact that candidates from the Brexit party, Nigel Farage, will claim 43 seats in parliament, competing with candidates from parties opposing the British exit from the EU. It is believed that such tactics can help conservatives gain a majority in parliament. Today, Boris Johnson and Jeremy Corbin will present their election programs to delegates to a conference organized by the Confederation of British Industry (CBI). Johnson has already addressed businessmen, and Corbin has yet to do so. The Prime Minister admitted that Brexit is hampering investment and job creation but has promised tax cuts and economic stability.

Japan

JPY is weakening today against its main competitors – GBP, EUR, and USD.

JPY is weakening amid positive signals on trade negotiations between China and the United States. The closeness to their completion, which American officials are talking about, is forcing investors to sell JPY as a shelter haven. On Tuesday, the WTO’s headquarters in Geneva will host the second round of bilateral negotiations between South Korea and Japan over export restrictions. The parties will again try to resolve the dispute over the payment by Japanese enterprises of South Korean citizens of monetary compensation for forced labor and Japanese restrictions on the export of a number of strategic materials to Korea. The first round of negotiations took place last month and did not bring results.

Australia

AUD is strengthening against JPY today but weakening against EUR, GBP, and USD.

Due to a lack of significant economic releases, AUD is trading under the influence of technical factors. Tomorrow, investors are waiting for the publication of the minutes of the November meeting of the Reserve Bank of Australia on monetary policy. Traders will look in it for hints of further actions of the regulator. The RBA decided to keep the interest rate unchanged at 0.75%. At the same time, the head of the regulator, Philip Lowe, noted that the period of low interest rates in the Australian economy will be long, and the bank is ready to further mitigate the monetary policy if necessary.

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