Friday 19th July: NY Fed President Williams’ comments renew market optimism

Global Markets:

• Asian Stock Markets : Nikkei up 2.00%, Shanghai Composite up 0.77%, Hang Seng up 1.12%, ASX up 0.77%
• Commodities : Gold at $1443.05 (+1.05%), Silver at $16.48 (+1.76%), Brent Oil at $62.84 (+1.47%), WTI Oil at $55.86 (+1.01%)
• Rates : US 10-year yield at 2.047, UK 10-year yield at 0.760, Germany 10-year yield at -0.321

News & Data:

• (USD) Philly Fed Manufacturing Index 21.8 vs 5 expected
• (GBP) Retail Sales m/m 1.00% vs -0.30% expected
• Fed Vice Chair: US economy in good place, but uncertainty has increased
• NY Fed: Speech By Williams Not About Potential Policy Actions
• ‘No-deal’ Brexit dealt blow by UK parliament

Markets Update:

Asian stock markets are in positive territory on Friday following the overnight gains on Wall Street as comments by New York Federal Reserve President John Williams raised hopes of a deeper than expected interest rate cut by the central bank later this month. However, the New York Fed later clarified that the speech should not be read as an indication of potential policy actions

In addition, a positive revenue outlook from Taiwan Semiconductor Manufacturing Co. and better-than-expected fourth-quarter earnings results from Microsoft Corp. boosted tech stocks in Asia. In mainland China, the Shanghai composite rose 0.8% by the afternoon, while the Shenzhen composite added 0.6%. Over in Hong Kong, the Hang Seng index advanced 1.1%.

In South Korea, the Kospi gained 1.4%, as shares of industry heavyweight Samsung Electronics advanced beyond 1%. The Nikkei 225 in Japan added 2% in afternoon trade, as shares of semiconductor equipment manufacturer Tokyo Electron surged more than 4%. The Topix index also rose 1.9%.

The dollar index against a basket of six major currencies stood little changed at 96.841 after losing roughly 0.5% overnight to a two-week low of 96.671 in the wake of comments from the Fed’s Williams. U.S. Treasury yields were lower across the board in light of Williams’ dovish views. The 2-year yield was at 1.7894% after touching a two-week low of 1.7520%. The 10-year yield declined to a 10-day trough of 2.023% and was last at 2.0465%.

In commodities, U.S. crude oil futures reversed a large part of the previous day’s deep losses, rising 1.45% to $56.10 per barrel.

Upcoming Events:

• 09:30 AM GMT – (GBP) Public Sector Net Borrowing
• 01:30 PM GMT – (CAD) Core Retail Sales m/m
• 01:30 PM GMT – (CAD) Retail Sales m/m
• 03:00 PM GMT – (USD) Prelim UoM Consumer Sentiment
• 04:05 PM GMT – (USD) FOMC Member Bullard Speaks
• 09:30 PM GMT – (USD) FOMC Member Rosengren Speaks
• 09:30 PM GMT – (USD) Building Permits
• &more…