Indices mixed amidst trade headlines; CAD drops after jobs miss

Summary:

  • Boost from trade headlines starting to fade?

  • UK markets on course of rmixed week

  • Gold drops to 3-week low 

  • CAD drops after jobs data misses

  • Crypto newsletter: Ripple near key level

 

Another day another trade headline. The repetitive nature of the will-they-won’t they headlines on a possible US-China trade deal seems to be not just growing old for those of us who analyse the markets but also for the markets themselves, with the latest one failing to cause as big a reaction as past iterations. Earlier news crossed the wires that the White House are “optimistic about some kind of US-China trade deal” and that if a deal is reached then some tariffs could be lifted. Not too long after an opposing story dropped that Trump has not yet decided to rollback tariffs and the merry-go-round goes on. 

 

The impact of these items on indices has become less pronounced and it is perhaps telling that there’s been some weakness in recent trade with most of Europe trading a little lower on the cash close. It’s a similar story across the Atlantic where there’s been declines seen in the US benchmarks, although the drops in the region of 0.5% aren’t large considering the recent gains. 

 

While the FTSE is on course to post a weekly gain, the rise in the benchmark has been outdone by the rally seen in European equities in recent sessions and the US where all 3 major indices have chalked up all-time highs. The move in stocks has hogged the limelight and received the lion’s share of attention but arguably the more noteworthy action has occurred in the fixed income space with significant increases seen in yields. 

 

The chief reason for these gains has been more optimism on the US-Sino trade front and with this coming shortly after a pick-up in key economic data and a growing belief that the Fed will now at least bide their time before delivering further cuts, should they decide further stimulus is necessary. Taken together, these factors provide a pretty potent cocktail for higher yields and these increases can be felt keenly in the precious metals complex with Gold on track for its largest weekly drop since the 2016 US election.   Gold has fallen sharply this week with the market down by almost $50 from last week’s closing level.

The main economic release from the North American session comes from Canada this afternoon, with the latest jobs data coming in worse than expected. The data was as follows:

 

  • Employment change: -1.8k vs +15k exp. +53.7k prior

  • Full time roles: -16.1k vs +2.5k exp. +70k prior

  • Part time roles: +14.3k vs +12.5k exp. -16.3k prior 

  • Unemployment rate: 5.5% vs 5.5% exp. 5.5% prior

 

This is clearly a negative report with not only the net change coming in negative but more important the full time roles falling by 16.1k. After two consecutive strong readings of +81.1k and 53.7k respectively this is a disappointment and given the dovish shift seen from the BoC following their last meeting the chances of a rate cut at the next decision will rise further after this. Unsurprisingly the Cnaadian dollar dropped on this and is trading lower against most of its peers at the time of writing.

 

Finally our latest crypto newsletter focuses on Ripple amongst other things and can be read in full here.

 

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