It has been another wild ride in the stock markets today, with an early rally being wiped out, taking out Friday’s lows in both the DJI and the S+P, before a sharp rally late in the day to limit some of the damage, but with the longer term charts still looking ominous. Sell rallies is still the overall theme while also taking profits into any sharp falls as the level of volatility is going to remain high. The reason for the falls seems to rest on renewed “trade war” headlines, with Bloomberg reporting that the US is preparing to announce tariffs by early December on all remaining Chinese imports if talks between Trump and Xi fail.
The FX markets were more benign and look set to remain rangebound today, although the EU GDP may cause some waves for the Euro. There is little else of a major market moving nature and it will be news headlines that create any volatility.
Silver and Oil were on the move on Monday, both down around 1.5%, and both look to be a sell on rally scenario.
In terms of news headlines and data on Monday, the Euro closed a little lower on news that German Chancellor Angela Merkel will not seek re-election as head of her CDU party, while Cable remains heavy because of the usual Brexit woes and despite the UK Chancellors’ budget speech, announcing tax cuts for households and the easing of welfare curbs for poorer working families. With regards to data, US consumer spending rose for a seventh straight month in September, +0.4%mm, with August revised up from 0.3% to 0.5%, but income recorded its smallest gain in more than a year (+0.2%mm) on moderate wage growth, suggesting that the current pace of spending was unlikely to be sustained.
Tuesday sees a fair bit of data although much of it secondary, beginning with the Australian Building Permits (exp +3.0%mm), a speech by the RBA’s Bullock and the Japan Unemployment for Sept. Europe will begin with the German Unemployment data (exp 5.1%, -12K) although the real focus will be on the EU Preliminary Q3 GDP (exp 0.4%qq, 1.8%yy). The EU Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate will also be released. The US will be quiet, with just the Case Shiller House Price Index and the API Weekly Crude Oil Stock Inventory due for release.
Economic data highlights will include:
Tue: Japan Unemployment, , Australian Building Permits, RBA Bullock Speech, German Unemployment, EU Q3 Preliminary GDP, Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, German CPI, Case Shiller House Price Index, UK Budget Report, CBI Distributive Trade Survey – Realised, Case Shiller House Price Index, API Weekly Crude Oil Stock Inventory
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