Wednesday 14th August: Asian stocks join global equity surge on account of tariff relief

Global Markets:

• Asian Stock Markets : Nikkei up 0.82%, Shanghai Composite up 0.56%, Hang Seng up 0.32%, ASX up 0.42%
• Commodities: Gold at $1511.75 (-0.16%), Silver at $16.95 (-0.22%), Brent Oil at $60.84 (-0.75%), WTI Oil at $56.50 (-1.05%)
• Rates : US 10-year yield at 1.674, UK 10-year yield at 0.491, Germany 10-year yield at -0.619

News & Data:

• (GBP) CB Leading Index m/m -0.30% vs -0.50% previous
• (USD) Core CPI m/m 0.30% vs 0.20% expected
• (USD) CPI m/m 0.30% vs 0.30% expected
• (USD) NFIB Small Business Index 104.7 vs 104.9 expected
• (GBP) 30-y Bond Auction 1.15|2.0 vs 1.42|1.8 previous
• (EUR) ZEW Economic Sentiment -43.6 vs -21.7 expected
• (EUR) German ZEW Economic Sentiment -44.1 vs -27.8 expected
• (GBP) Unemployment Rate 3.90% vs 3.80% expected
• (GBP) Claimant Count Change 28.0K vs 42.0K expected
• (GBP) Average Earnings Index 3m/y 3.70% vs 3.70% expected
• (EUR) German WPI m/m -0.30% vs 0.20% expected
• (EUR) German Final CPI m/m 0.50% vs 0.50% expected
• (JPY) Prelim Machine Tool Orders y/y -33.00% vs -37.90% previous
• (JPY) Tertiary Industry Activity m/m -0.10% vs -0.10% expected
• (CNY) Foreign Direct Investment ytd/y 7.30% vs 7.20% previous
• (AUD) NAB Business Confidence 4 vs 2 previous
• (JPY) Core Machinery Orders m/m 13.90% vs -1.00% expected
• (AUD) Westpac Consumer Sentiment 3.60% vs -4.10% previous
• (AUD) Wage Price Index q/q 0.60% vs 0.50% expected
• (CNY) Fixed Asset Investment ytd/y 5.70% vs 5.90% expected
• (CNY) Industrial Production y/y 4.80% vs 6.00% expected
• (CNY) Retail Sales y/y 7.60% vs 8.60% expected
• (CNY) Unemployment Rate 5.30% vs 5.10% previous
• (EUR) German Prelim GDP q/q -0.10% vs -0.10% expected
• Dollar soars versus yen after U.S. makes trade concessions

Markets Update:

Asian shares gained, though off session highs, on Wednesday after the U.S. said it would hold off on tariffs of Chinese imports of mobile phones, toys and several other items typically on holiday shopping lists. Early gains were tempered by data that China’s industrial output in July was worse than expected, rising 4.8% compared to a 6.3% gain in June. The tariff news largely offset a raft of disappointing China data for July, although the safe-haven yen enjoyed a lift amid the deepening gloom in the world’s second-biggest economy.

Japan’s Nikkei lost some early gains and is trading up 0.82% while the Shanghai Composite edged up 0.56%. Hong Kong’s Hang Seng, which has been hurt by disruptions from large anti-government protests yet rose 0.5%, also gave up early gains, and is up 0.32%.   The S&P/ASX 200 index has returned to form on Wednesday after trade war concerns eased – the index is up 0.42% at 6,595.90 points. But Wednesday’s bounce hardly clawed back the sizable losses for all equity markets over recent months, and broad market sentiment remained fragile given that the U.S.-China trade conflict is still far from resolved.

The 10-year U.S. Treasury note edged down 2.5 basis points to 1.674% after climbing 6 basis points overnight. The yield had plumbed a three-year low of 1.595% a week ago. In currencies, the safe-haven yen advanced 0.25% to 106.485 per dollar as the weaker-than-expected Chinese economic data reinforced the view that resolving the trade war was a long way off even with Trump delaying some additional tariffs. The dollar index versus a basket of six major currencies was flat at 97.822 after advancing nearly 0.5% the previous day.

Oil prices were down on Wednesday in Asia as rising crude inventories outweighed reports that the U.S. has delayed tariffs on certain Chinese goods. Brent crude oil is down 0.75, losing steam after jumping nearly 5% the previous day. Gold prices dropped on Wednesday in Asia as the U.S.’s decision to delay imposing tariffs on certain Chinese goods eased tension between the two sides and dented demand for the safe-haven metal. Prior to the news, gold prices hit six-year highs on Hong Kong’s political chaos that saw its airport disrupted for the second day amid ongoing protests.

Upcoming Events:

• 8:30 am GMT – (GBP) CPI y/y
• 8:30 am GMT – (GBP) PPI Input m/m
• 8:30 am GMT – (GBP) Core CPI y/y
• 8:30 am GMT – (GBP) HPI y/y
• 8:30 am GMT – (GBP) PPI Output m/m
• 8:30 am GMT – (GBP) RPI y/y
• 9:00 am GMT – (EUR) Flash Employment Change q/q
• 9:00 am GMT – (EUR) Flash GDP q/q
• 9:00 am GMT – (EUR) Industrial Production m/m
• Tentative – (EUR) Spanish 10-y Bond Auction
• 12:30 pm GMT – (USD) Import Prices m/m
• 14th-18th GMT – (USD) Mortgage Delinquencies
• 2:30 pm GMT – (USD) Crude Oil Inventories
• 11:00 pm GMT – (AUD) RBA Assist Gov Debelle Speaks
• &more…