It has been another rangebound session as traders await the signing, later today, of Phase 1 of the US/ China trade agreement. The US$ and stocks did briefly rise following the release of the stronger than expected US inflation figures but the rally was brief and has since seen a return to previous levels across most assets. US CPI rose 0.2%mm in December, matching expectation but accelerated to 2.3%yy while the core CPI unchanged at 2.3%yy. Also underpinning stocks on Tuesday, briefly taking the DJI to new highs, were the better than expected results from JP Morgan and Citigroup. On the other hand, Wells Fargo failed to match expectations and took some of the steam out of the rally.
Stocks are ending the session pretty much flat, as is Gold, while WTI is up by around 0.5% ahead of the signing of the trade deal. News reports do suggest that existing tariffs on billions of dollars of Chinese goods coming into the US are likely to stay in place until after the American presidential election, and that any move to reduce them will hinge on Beijing’s compliance with the terms of a phase-one trade accord. If so, it could place some downside pressure on the stock markets and so is worth monitoring.
Wednesday begins with the NZ House Price Index and Food Price Index along with the Australian WBC Consumer Confidence. UK inflation data will be the focus in Europe, which will be closely watched following on from yesterday’s BOE comments with regard to a possible rate cut in the event of ongoing soft data. The EU will see November Trade Balance and Industrial Production, while the US will look to the US PPI (exp 0.2%nn, 1.3%yy) and New York State Empire Mfg Index for guidance. The main event of the day though will be the signing on Phase 1 of the US/China trade agreement, which could yet provide us with another stock market rally. Note also that today’s corporate reporting headlines will come from BOA, BNY/Mellon, Blackrock, Schwab, Goldmans, Alcoa and Bancorp.
Economic data highlights will include:
Wed: REINZ House Price Index, NZ Food Price Index, Australian WBC Consumer Confidence, UK CPI, PPI, RPI, EU Industrial Production, Trade Balance, US New York State Empire Mfg Index, PPI, EIA Crude Oil Stocks Weekly Change, US/China Trade deal signing – Phase 1, Fed’s Harker – Speech
Market moves, in brief:
FX: DXY 97.37 (-0.01%)
Bonds: US10Y; 1.820% (-1.54%), German 10Y; -0.170% (-6.38%), UK 10Y; +0.751% (-3.32%), Australian 10Y; 1.259% (+3.61%), NZ 10Y; 1.527% (+3.47 %), China 10Y; 3.219% (+0.29%)
Stock Indices: DJI; +0.27%, S+P; -0.09%, NASDAQ; +0.02%, EUStoxx50; -0.13%, FTSE100; +0.06%, Shanghai Composite; -0.28%,
Metals: Gold $1545 oz (-0.15%), Silver $17.80 oz (-0.88%), Copper $2.8665 lb (+0.195%), Iron Ore $94.83 per tonne (NYMEX) (+0.85%),
Oil: WTI $58.37 pb (+0.55%)
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