Weekly Market Report
US equity markets regained some lost ground to close the week, supported by strong corporate earnings and despite firming interest rates. The week saw continued volatility, with both rises and falls, following the losses from the previous week. It is October! US markets are experiencing some recalculations, but it does not even approach a technical market correction. On the other hand, China has accumulated losses of more than 30% of its share market! Chinese growth has also been reviewed lower, as the Chinese suffer the consequences of a trade war with the US. Chinese statistics are uniformly predictable, to the extent of manipulation, but even these are reflecting a tortured economic reality.
US Bond yields continued to trade around record levels, which has triggered equity uncertainty, providing alternate investment options. The strong US economy is supported by economic data and reveals a complete contrast to China. The Sino/US trade war has created global uncertainty, but the Chinese have resisted compliance, hoping Mid-Term elections might supply some leverage. The EUR traded 1.1500, impacted by Brexit and the Italian budget crises, while the GBP returned to 1.3250. Brexit remains the narrative which dominates European markets.
The Chinese trade negotiations dominate the trade exposed currencies, with the AUD holding 0.7100, while the NZD looks to regain 0.6600. Local domestic economies have performed reasonably well but have been held hostage by the threats of trade wars. The coming week is light on global economic releases but will be influenced by Central Bank speculation and activity. The ECB is set to announce their latest rate decision, which is likely to be neutral, and the Fed's Biege Book will be released. Growth and trade will likely dominate.
Weekly Market Calendar
22/10 EU Debt/GDP, Chicago Fed National Activity Index
23/10 Australia Consumer Confidence, Richmond Fed National Activity, EU Consumer Confidence
24/10 Japan Manufacturing PMI, Japan Leading Index, France/German/EU Services/Manufacturing/Composite PMI, US Weekly Mortgage Applications, US House Price Index, US Pending Home Sales, US New Home Sales, Feds Biege Book
25/10 NZ Trade Exports/Imports, EU Economic Forecasts, German Consumer Confidence, German IFO Business Confidence, ECB Rate Decision, US Trade Exports/Imports, US Weekly Jobless Claims, Kansas City Fed Manufacturing Activity
26/10 Japan CPI, US GDP, University of Michigan Sentiment, German Retail Sales
Paul Bettany
Collinson & Co
paul@collinsonfx.com
0406-744-923