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stock market morning report

More Positive Trade News Lifts The Stock Markets

Investors remain focused on the US-China trade relations, as well as comments by Fed Chairman Jerome Powell. Today, the Ministry of Commerce of China announced that representatives of the two countries held another round of telephone conversations. It was stated that the parties “reached consensus on how to resolve related problems” and will continue consultations to agree on the remaining issues of the initial trade agreement. However, information on specific solutions was not provided, so the market practically did not respond to the message. Speaking yesterday in Providence, Fed Chairman Jerome Powell noted that the regulator intends to maintain inflation at 2%, as this is a signal of sustainable economic growth. These comments were regarded as a hint that the Fed does not plan to raise rates in the near future.

Today, oil quotes made a weak attempt to grow. Quotes are supported by investors’ hopes for a US-China trade deal after today’s positive reports by the Chinese Ministry of Commerce. On the other hand, the situation is still uncertain and the deal could be broken due to the support of Hong Kong protesters by the US Congress, which Beijing considers interference in its internal affairs. By the end of the day, market participants are waiting for the publication of a weekly report on US oil reserves from the API. The last time they rose by 5.954 million barrels. The continuation of this trend may put pressure on prices.

During the day, investors are waiting for the publication of data on the consumer confidence index and new houses sales in the US, which are expected to be positive. The index can grow from 125.9 to 127.0 points, and home sales from 701K to 709K. The implementation of the forecast can strengthen USD.

Eurozone

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Today, the euro strengthens against the pound and the US dollar and has ambiguous dynamics against the Japanese yen.

Investors are focusing on the publication of November data on the German consumer climate index from the Gfk Institute. The indicator grew from 9.6 to 9.7 points. Gfk experts noted that an exceptionally high level of trust among German consumers helped prevent a recession in Germany in Q3. Consumers are optimistic about the improvement in economic conditions, so the upcoming holiday sales may be significant.

United Kingdom

The British pound is weakening today against its main competitors – the euro, the yen, and the US dollar.

In the absence of significant economic releases, investors are focused on parliament elections. The pound is currently pressured by recent opinion polls recording a reduction in the gap between the Conservative and Labor parties. According to a Reuters poll, last week the conservatives advantage shrank to 7 points. This situation threatens that none of the parties will get a majority in Parliament and it will not be possible to ratify the Brexit deal again.

Japan

The Japanese yen today is strengthening against the pound and has ambiguous dynamics with the euro and the US dollar.

In the absence of important macroeconomic releases, JPY movement is of technical nature. Investors are waiting for the details of the last telephone conversation between Vice Premier Liu He with US Treasury Secretary Steven Mnuchin and sales representative Robert Lighthizer. According to the Chinese Ministry of Commerce, the parties reached a consensus on solving the most important problems, but no specifics were voiced.

Australia

The Australian dollar is now strengthening against the pound, weakening against the euro and has ambiguous dynamics with the yen and the US dollar.

Investors are focused on the comments of the Head of the Reserve Bank of Australia, Philip Lowe. Speaking to economists in Sydney, Lowe noted that the regulator could enable a QE program if rates are reduced to 0.25%. In this case, the central bank may begin to purchase government bonds in the secondary market. However, such a development of events is unlikely. The economy is expected to resume growth in the near future. Lowe also confirmed that the introduction of negative RBA rates is extremely unlikely.

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