Senior Market Strategist

Total Content 104

Articles 104

Market Round-up

By David Morrison  |  24/08/2018 13:44
”trade

The current US bull market is now the longest on record as the S&P 500, NASDAQ 100 and Russell 2000 flirt with their all-time highs

The longest-ever US bull market continues, despite severe pressure on emerging markets, no breakthrough on tariffs between the US and China, Trump’s political woes and the expectation of further monetary tightening from the US Federal Reserve. This comes as the European majors tack sideways with a downside bias while China’s Shanghai Composite remains in a bear market. The fact that there’s such a marked divergence between the relative performances of US and Chinese equities should only embolden the Trump administration in pushing ahead with further tariffs.

Powell speaks at Jackson Hole

Federal Reserve Chairman Jerome Powell is the star attraction at this week’s Jackson Hole Economic Symposium. Mr Powell will be speaking on Friday afternoon (after publication of this note) and market participants will be paying close attention to what he says, particularly regarding the timetable for further rate hikes and the reduction in the Fed’s balance sheet. The current expectation is that the Fed will raise rates by 25 basis points in September, and again in December. So, if Mr Powell signals that the US central bank is concerned about the sell-off in emerging markets or the continued flattening of the US Treasury yield curve and may consider a pause in the current quarterly rate hike cycle, this would weigh on the dollar and remove some immediate emerging market risk.

FOMC minutes

But it would be a surprise if he did. The minutes of the Fed’s last meeting in July/August reinforced the FOMC’s confidence in the US economy saying: "Many participants suggested that if incoming data continued to support their current economic outlook, it would likely soon be appropriate to take another step in removing policy accommodation” and: "Participants generally expected that further gradual increases in the target range for the federal funds rate would be consistent with a sustained expansion of economic activity, strong labour market conditions, and inflation near the Committee’s symmetric 2% objective over the medium term."

Fed’s balance sheet

But a couple of participants raised the subject of the size and composition of the Fed’s balance sheet. It has been suggested that the Fed may signal that it is prepared to run a larger balance sheet than previously forecast by analysts. If this is the case, then this would be dollar-positive.

Trump dumps on Powell

Jerome Powell’s job has been complicated by recent comments from Donald Trump. Earlier this week the President warned Mr Powell and the Federal Reserve not to raise interest rates further, saying the Fed should do more to help him to boost the economy. It would be very unlikely that Jerome Powell would sway in the face of such unwarranted political intervention. But this being so and knowing the Trump administration’s desire for a weaker dollar, we shouldn’t be surprised if the president intervenes verbally in the coming weeks and months to ‘talk down’ the greenback. He certainly has ‘previous’ on this.

US politics and China

In the same Reuters interview Mr Trump accused China of guiding its currency lower and said there was little hope of progress in the ongoing trade dispute between the two countries in this week’s talks. Those talks ended yesterday with no progress made. Additionally, it is understood that Chinese officials have hinted that there will be no further negotiations until after the US mid-term elections in November. It looks as if China is prepared to sit back and watch Trump struggle with the fall-out from the Manafort and Cohen trials. China will also want to wait for the mid-term election results to see if the Republicans lose control of the lower house which would weaken President Trump’s position.

Trade tit-for-tat

China and the US have just slapped additional tariffs on each other. The two countries have now imposed tit-for-tat tariffs on a combined $100 billion of goods over the last two months and are threatening more. The aggregate view amongst economists, per Reuters, is that every $100 billion of imports hit by tariffs will reduce global trade by around 0.5%. China’s economic growth is forecast to lose around 0.2% in 2018, with even less effect on the US. But a larger impact is expected next year, dragging in other countries and companies tied into China’s global supply chains.

Yuan set to weaken further?

Trump has demanded that China makes significant changes to its intellectual property practices and undertakes to import more US goods and services. If not, Trump has threatened to slap tariffs on close to all of China’s exports to the US, which was worth over $500 billion in 2017. As Chinese imports from the US were around $130 billion last year, Beijing could retaliate by allowing its currency to depreciate further.

US “winning” the trade war

On Wednesday US Commerce Secretary Wilbur Ross said on CNBC: “…at the end of the day, we have many more bullets than they do. They know it. We have a much stronger economy than they have, they know that too," Ross added: "if the market were worried about trade, it wouldn't be at a record."
The Trump administration continues to point to US stock market strength, and Chinese stock market weakness, as evidence that tariffs are having the desired effect. Whether this will still be the case if the trade war escalates over the coming months remains to be seen. As mentioned in an earlier note, if President Trump thinks the yuan is too cheap with a USDCNY rate around 6.85, he’ll choke on his Big Mac if it goes on to break above 7.00.

Looking ahead

There’s a fair amount of data to look out for in next week’s economic calendar. However, most is ‘second order’ and isn’t expected to influence financial markets to a great degree. The exceptions to this are the first revision to US second quarter GDP on Wednesday, US Core PCE (the Fed’s preferred inflation measure) due Thursday with Chinese Manufacturing and Non-Manufacturing PMIs and the Euro zone’s CPI Flash Estimate on Friday.
 
 
 
Any information, analysis, opinion, commentary or research-based material on this page is for information purposes only and is not, in any circumstances, intended to be an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any person acting on it does so entirely at their own risk and GKFX accepts no responsibility for any adverse trading decisions. You should seek independent advice if you do not understand the associated risks.
 

Share

Author's Other Opinion & Analysis

  • Central bank meetings in focus
    By David Morrison  |  12/09/2018 15:12

    ECB and BoE meet on Thursday

  • German DAX continues to struggle
    By David Morrison  |  11/09/2018 15:09

    Another support level broken

  • Longest ever US bull market?
    By David Morrison  |  22/08/2018 15:01

    US equities remain in favour

  • Focus on Jackson Hole
    By David Morrison  |  21/08/2018 14:47

    Fed Chair speaks on Friday

  • S&P 500 backs away from record highs
    By David Morrison  |  16/08/2018 15:04

    US equities not immune from emerging market contagion

  • The 'never-ending' slide in gold
    By David Morrison  |  14/08/2018 14:59

    Gold breaks below $1,200

  • S&P 500 closes in on record high
    By David Morrison  |  08/08/2018 15:11

    US equities continue to strengthen

  • EURUSD bounces off 1.1500
    By David Morrison  |  07/08/2018 14:40

    EURUSD retests support

  • Weekly Market Wrap
    By David Morrison  |  03/08/2018 14:17

    The second quarter earnings season is beginning to wind down

  • Non-Farm Payroll look-ahead
    By David Morrison  |  02/08/2018 15:11

    Payrolls expected to grow by 190,000

  • Bank of England rate decision
    By David Morrison  |  01/08/2018 13:43

    Rate hike expected

  • Fed meeting look-ahead
    By David Morrison  |  31/07/2018 15:00

    Fed expected to keep rates unchanged

  • Weekly Market Wrap
    By David Morrison  |  27/07/2018 13:37

    This article looks ahead to next week’s earnings, central bank meetings and data releases

  • A pause in gold’s decline
    By David Morrison  |  25/07/2018 14:58

    Overall trend still negative

  • S&P 500 holding above 2,800
    By David Morrison  |  24/07/2018 14:53

    Retest of highs in prospect?

  • Crude steadies after slump
    By David Morrison  |  12/07/2018 14:00

    Trade fears trigger selling cascade

  • Gold threatens to break December lows
    By David Morrison  |  11/07/2018 14:27

    Gold under pressure

  • US S&P 500 retests resistance
    By David Morrison  |  10/07/2018 14:44

    Investors shrug off tariff concerns

  • Weekly look-ahead
    By David Morrison  |  06/07/2018 14:24

    Weekly Market Wrap

  • FOMC minutes and Non-Farm Payroll look-ahead
    By David Morrison  |  05/07/2018 13:07

    US employment update this Friday

  • Crude pulls back from multi-year highs
    By David Morrison  |  04/07/2018 15:06

    Saudi Arabia prepared to raise output

  • Investors relaxed over impending tariffs
    By David Morrison  |  03/07/2018 14:19

    Dollar slips and stock indices rally

  • S&P 500 retests support
    By David Morrison  |  02/07/2018 15:22

    Equity markets under pressure

  • No respite for Sterling
    By David Morrison  |  28/06/2018 15:32

    Pound under pressure

  • EU Summit and the single currency
    By David Morrison  |  27/06/2018 15:23

    Euro under pressure

  • Investors react to fears of trade tariff escalation
    By David Morrison  |  26/06/2018 15:32

    Monday saw significant selling across global equity markets

  • Weekly Market Wrap
    By David Morrison  |  15/06/2018 15:22

    There was a broad-based sell-off across risk assets on Friday

  • Traders turn to the ECB
    By David Morrison  |  14/06/2018 07:31

    Expectations have risen that the ECB will talk of ending QE

  • Federal Reserve set to raise rates
    By David Morrison  |  12/06/2018 14:55

    The Fed concludes its two-day FOMC meeting on Wednesday

  • Weekly market wrap
    By David Morrison  |  08/06/2018 15:22

    Next week sees central bank meetings for the US, Euro zone and Japan

  • WTI breaks below trend-line
    By David Morrison  |  05/06/2018 15:30

    Both Brent and WTI crude have sold off sharply

  • Weekly market wrap
    By David Morrison  |  01/06/2018 14:29

    Friday’s Non-Farm Payroll number was much stronger than expected

  • Non-Farm Payroll look-ahead
    By David Morrison  |  31/05/2018 15:42

    This Friday sees the release of US Non-Farm Payrolls for May

  • Weekly look-ahead
    By David Morrison  |  25/05/2018 15:10

    It’s a holiday-shortened week with Bank Holidays on Monday for both the UK and US

  • EURUSD update
    By David Morrison  |  23/05/2018 15:20

    The EURUSD currency pair took another lurch lower today

  • Weekly Market Wrap
    By David Morrison  |  18/05/2018 15:26

    Traders are keeping a close eye on oil prices, the dollar and US Treasury bonds

  • Gold under pressure
    By David Morrison  |  16/05/2018 13:58

    Gold had shown remarkable resilience over the past few weeks

  • Weekly Market Wrap
    By David Morrison  |  11/05/2018 15:04

    Equities rallied last week

  • Bank of England rate decision
    By David Morrison  |  09/05/2018 14:59

    A look at Thursday's MPC rate decision

  • Weekly Market Wrap
    By David Morrison  |  04/05/2018 15:21

    Friday brought the release of the latest US Non-Farm Payroll report

  • Dollar break-out
    By David Morrison  |  02/05/2018 08:12

    Early last week the dollar broke out of several trading ranges

  • Weekly market wrap
    By David Morrison  |  27/04/2018 15:13

    The yield on the benchmark 10-year Treasury note broke above the significant 3.0% level

  • Crude weaker, but still near highs
    By David Morrison  |  25/04/2018 15:32

    Oil fell yesterday following comments from French President Emmanuel Macron

  • US dollar breaks out
    By David Morrison  |  24/04/2018 15:55

    Yesterday evening the Dollar Index broke above 90.00

  • Weekly market wrap
    By David Morrison  |  20/04/2018 15:06

    Earnings continue to get a boost on...

  • Another look at the EURUSD
    By David Morrison  |  18/04/2018 15:06

    Trump accuses China and Russia of “playing the currency devaluation game”.

  • S&P 500 update
    By David Morrison  |  17/04/2018 15:53

    The US stock market steadied last week

  • Weekly market wrap
    By David Morrison  |  13/04/2018 15:19

    The first quarter earnings season got underway last week

  • EURUSD update
    By David Morrison  |  11/04/2018 08:14

    Still range-bound near highs

  • Weekly market wrap
    By David Morrison  |  06/04/2018 15:29

    US payrolls disappoint

  • Non-Farm Payroll look-ahead
    By David Morrison  |  05/04/2018 13:48

    Tomorrow sees the latest update for arguably the most important, and potentially market-moving, global data release – US Non-Farm Payrolls.

  • S&P 500 update
    By David Morrison  |  04/04/2018 14:31

    S&P 500 breaks below 200-day moving average

  • Weekly market wrap
    By David Morrison  |  29/03/2018 13:38

    This Easter holiday couldn’t really come at a worse time

  • S&P 500 - update
    By David Morrison  |  27/03/2018 13:47

    The S&P since February's sell-off

  • Weekly look-ahead
    By David Morrison  |  23/03/2018 16:59

    Holiday-shortened week

  • NASDAQ leads sell-off
    By David Morrison  |  22/03/2018 15:53

    Markets lead lower by tech sell-off

  • Fed meeting in focus
    By David Morrison  |  21/03/2018 10:50

    Investors on edge ahead of Fed decision

  • Weekly Outlook
    By David Morrison  |  16/03/2018 15:41

    Fed meeting in focus

  • S&P 500 - the technical picture
    By David Morrison  |  14/03/2018 16:34

    This week has seen the US majors pull back from their best levels

  • Weekly look-ahead
    By David Morrison  |  09/03/2018 16:16

    The headline payroll number smashed above the high end of expectations

  • Non-Farm Payroll look-ahead
    By David Morrison  |  08/03/2018 14:30

    All eyes on wage growth

  • ECB and BOJ meetings in focus
    By David Morrison  |  07/03/2018 17:24

    Investors experienced a shock last month

  • Weekly Outlook
    By David Morrison  |  05/03/2018 10:15

    This is a big week for financial markets

  • Euro bounces, but political uncertainty remains
    By David Morrison  |  02/03/2018 11:01

    The euro rallied sharply overnight

  • Weekly look-ahead
    By David Morrison  |  23/02/2018 16:58

    US stock index futures were pushing higher ahead of Friday’s US open.

  • FOMC minutes and the German DAX
    By David Morrison  |  22/02/2018 14:33

    Investors were initially wrong-footed by minutes from a Federal Reserve meeting.

  • FOMC minutes in focus
    By David Morrison  |  21/02/2018 11:47

    All eyes are on the release of minutes from the Fed’s January FOMC meeting

  • Situation remains unresolved
    By David Morrison  |  20/02/2018 13:09

    The stock market correction may have further to go

  • Weekly Outlook
    By David Morrison  |  16/02/2018 16:02

    Global stock indices fought back last week

  • Out of the woods? Perhaps not
    By David Morrison  |  15/02/2018 13:37

    Yesterday brought the latest update on US inflation

  • Inflation and the S&P 500
    By David Morrison  |  12/02/2018 16:30

    This article will focus on the S&P 500

  • Weekly Outlook
    By David Morrison  |  09/02/2018 16:35

    Friday was a roller-coaster session to round off a tumultuous week.

  • What now?
    By David Morrison  |  08/02/2018 15:54

    The current sell-off in global equities has been a long time coming.

  • Traders focus on volatility
    By David Morrison  |  06/02/2018 16:55

    Yesterday the Dow posted its biggest ever one-day loss in points terms

  • Rising yields lift troubled dollar
    By David Morrison  |  05/02/2018 16:17

    The US dollar stages a modest recovery.

  • Weekly look-ahead
    By David Morrison  |  02/02/2018 16:12

    Equity sell-off resumes while dollar rallies

  • Time for a correction?
    By David Morrison  |  31/01/2018 16:22

    Equities retreat as yields push higher

  • Crude prices dip
    By David Morrison  |  29/01/2018 15:57

    Oil slides as dollar rallies

  • Weekly look-ahead
    By David Morrison  |  26/01/2018 15:16

    What's in store for key markets

  • Dollar hits fresh 3-year lows
    By David Morrison  |  24/01/2018 16:38

    US dollar plunges ahead of Trump's Davos speech

  • Wall Street hits fresh highs
    By David Morrison  |  23/01/2018 15:46

    The three-day US government shutdown ended on Monday

  • Market Round-up
    By David Morrison  |  22/01/2018 16:53

    Monday marked day three of the US government shutdown.

  • Weekly look-ahead
    By David Morrison  |  19/01/2018 16:30

    The last couple of weeks have seen a number of significant technical breakouts

  • S&P 500 – Weekly Chart
    By David Morrison  |  18/01/2018 15:24

    Putting price action into context

  • Crude pulls back from three-year highs
    By David Morrison  |  17/01/2018 16:32

    On Monday WTI and Brent hit their highest levels since early December 2014

  • Gold, the dollar, bond yields and inflation
    By David Morrison  |  16/01/2018 15:00

    But in line with conventional wisdom the dollar’s sell-off triggered a sharp rally in gold.

  • Weekly look-ahead
    By David Morrison  |  12/01/2018 16:50

    Earlier in the week the US majors had a slight wobble

  • Gold traders eyeing the dollar
    By David Morrison  |  11/01/2018 15:48

    This article considers the recent price action on gold

  • Chinese news rattles markets
    By David Morrison  |  10/01/2018 15:33

    Chinese officials recommend “slowing or halting”

  • Could stocks rally further?
    By David Morrison  |  08/01/2018 17:00

    Most European stock indices ended Monday’s session in positive territory, playing catch-up after Wall Street’s sharp rally last week.

  • Weekly look-ahead
    By David Morrison  |  05/01/2018 15:55

    We rounded off this week with the final Non-Farm Payroll report of 2017. Headline payrolls rose 148,000 which was well below the 190,000 increase expected.

  • Dow smashes through 25,000
    By David Morrison  |  04/01/2018 16:07

    Yesterday the US majors ended at fresh all-time highs and this helped to lift Asian Pacific indices overnight.

  • US indices hit fresh record highs
    By David Morrison  |  03/01/2018 16:08

    US stock indices made another strong upside move yesterday which took both the S&P 500 and NASDAQ Composite up to fresh record highs. The buying has continued throughout today’s session

  • Mixed start to New Year
    By David Morrison  |  02/01/2018 16:56

    The first trading day of 2018 brought a mixed session as far as global stock indices were concerned.

  • New Year round-up
    By David Morrison  |  29/12/2017 15:22

    As 2017 draws to a close, here’s a quick round-up of how a few key markets look going into next year.

  • What's Next for Crude Oil?
    By David Morrison  |  19/12/2017 14:42

    This article will focus on price action in the front month WTI contract rather than Brent. WTI tends to provide better technical signals than Brent – not always, but often enough to give a cleaner overall picture.

  • Equities soar on US tax reform hopes
    By David Morrison  |  18/12/2017 16:10

    US and European stock indices soared on Monday as investors priced in an increasing probability that President Trump will deliver on his promise of tax reform before year-end.

  • Weekly Outlook
    By David Morrison  |  15/12/2017 14:26

    Here’s a brief heads-up for the week beginning 18th December

  • Central Bank monetary policy meetings
    By David Morrison  |  14/12/2017 15:48

    Here’s a quick rundown of the highlights from this week’s monetary policy meetings from the European Central Bank, Bank of England and US Federal Reserve

  • Look-ahead to the Federal Reserve meeting
    By David Morrison  |  13/12/2017 08:49

    Crucially, this week’s Fed meeting also brings an update to the FOMC’s Summary of Economic Projections.

  • Cboe launches Bitcoin futures
    By David Morrison  |  11/12/2017 16:26

    Listing Bitcoin futures on mainstream exchanges should ultimately help to boost the digital currency’s legitimacy and lead to more widespread acceptance.

  • Non-Farm Payroll look-ahead: 6 things you should know
    By David Morrison  |  08/12/2017 09:55

    So, here’s what to look for: the consensus expectation is for the headline Non-Farm Payrolls to rise 200,000 in November.

  • EURUSD – key events to consider
    By David Morrison  |  06/12/2017 17:07

    The dollar got a boost this week on the increased likelihood of an agreement on US tax reform being reached before the year-end.

Show More Articles

Sentiment

Open a Demo Account Open A Live Account

Losses can exceed deposits

RISK WARNING

The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice.

If such information is acted upon by you then this should be solely at your discretion and GKFX will not be held accountable in any way.

  • ForexF
  • IndicesI
  • CommoditiesC
        Back

        Login to Market Insight Account

        Your Market Insight account gives you access to the tools that we offer our customers including our
        Technical Studies & Sentiment for your accounts.

        Forgot Password?

        Don't you have a Market Insight account? With a few easy steps you can easily register to Market Insight

        Create a Market Insight's Account

        Your Market Insight account gives you access to the tools that we offer our customers including our Technical Studies & Sentiment for your accounts.

        register_ty

        Thank you!

        Welcome to Market Insight family!

        You have succesfully completed the registration.
        We will send you an e-mail to give you some
        instructions and our Terms and Conditions!
        Our account representatives will be contacting you as
        soon as possible. If you have any further questions
        please do not hesitate to mail us via info@marketinsight.com