Новини ринків

Major US stock indices fell markedly as investors analyzed the latest news regarding US-China trade relations and disappointing US consumer confidence data. The focus was also on the news that an increasing number of Democratic lawmakers called for initiating an impeachment process against President Donald Trump.

On Tuesday, Trump confirmed that he had ordered $ 400 million in military assistance for Ukraine to be frozen, but denied that he had done so as a leverage to force the president of Ukraine to launch an investigation that could harm Democratic rival Joe Biden.

In Washington, Speaker of the House of Representatives Nancy Pelosi met with other democratic lawmakers to consider the impeachment of the Republican President, who has endured repeated scandals since taking office in 2017.

Meanwhile, Bloomberg reported that China has granted several companies new permits to purchase at least 2 million tons of soybeans in the United States without applying tariffs. According to the agency, the company has already bought about 1.2 million tons of soybeans.

US Treasury Secretary Stephen Mnuchin has confirmed that trade negotiations between the two largest economies in the world will resume next month. In an interview with Fox Business Network, Mnuchin said U.S. and Chinese negotiators made some progress at deputy meetings last week. He also spoke positively about the resumption of Chinese purchases of American agricultural products by the PRC, but noted that "the most important issue is intellectual property."

Regarding the data, the Conference Board reported that the consumer confidence index fell sharply in September after it recorded a slight decline in August. According to the report, the index now stands at 125.1 (1985 = 100), compared with 134.2 in August (revised from 135.1). Analysts had expected the index to drop to 133.5. The report also showed that the current situation index, based on consumers' assessment of current business and labor market conditions, fell from 176.0 to 169.0, and the expectations index, based on short-term consumer forecasts regarding income, business and labor market conditions, fell from 106.4 to 95.8. Netflix (NFLX) also added pressure to the market, falling 4.62%, as several Wall Street analysts expressed concern about the company's future results.

Most DOW components recorded a decline (23 out of 30). Outsiders were the shares of The Goldman Sachs Group, Inc. (GS; -2.84%). The biggest gainers were The Boeing Company (BA; + 1.28%).

Almost all S&P sectors completed trading in the red. The conglomerate sector showed the largest decrease (-2.1%). Only the utilities sector recorded growth (+ 0.7%).

At the time of closing:

Dow 26,807.77 -142.22 -0.53%

S&P 500 2,966.60 -25.18 -0.84%

Nasdaq 100 7,993.63 -118.83 -1.46%

Hopes for allowing China into WTO have failed

Says China hasn't adopted promised reforms

China uses heavy state subsidies, steals IP

Cites company stealing Micron's products in China

WTO needs drastic change

World's second-largest economy shouldn't be allowed to call itself a developing country

The days of globalism are over

Says he's placed tariffs on over $500 bln of Chinese goods

Says carefully watching situation in Hong Kong

Expects China to honor treaty on Hong Kong

Ned Rumpeltin, the European head of FX strategy at TD Securities, expects the RBNZ policymakers to keep the OCR at 1% at tomorrow's meeting.

• “After the RBNZ's surprise 50bps rate cut last month, we note Q2 GDP printed in line with the Bank's expectations. At the same time, the NZD TWI now stands more than 4% below its Aug MPS projections. With this in mind, we think the Bank can afford to 'wait' and 'watch' developments - at least for now. That said, we think the Bank's 2020 midyear GDP forecasts for ~3%/yr growth appear ambitious. And with the global outlook remaining cloudy, the RBNZ is likely to reaffirm downside risks to its forecasts.
• Accordingly, we retain our call for the RBNZ to cut the cash rate to 0.75% in Nov. Against this backdrop, our base case sees NZD remaining on the defensive generally. We note, however, the daily RSI for AUDNZD has started to trend lower after reaching "overbought" levels earlier this month. This could limit upside potential unless Orr delivers another significant dovish surprise this week. Heading into the decision, last Friday's intraday high (1.0840) is the key pivot to the topside ahead of significant resistance in the 1.0875/1.0900 zone. Looking lower, a break below 1.0730 could target a move toward 1.0630.”

The latest survey from the Federal Reserve Bank of Richmond revealed on Tuesday that the U.S. fifth district's manufacturing softened in September.

According to the report, the composite manufacturing index declined from +1 in August to -9 in September, due mainly to decreases in shipments and new orders, which, however, were partially offset by a gain in employment.

Economists had expected a reading of -11.

A reading above 0 signals expansion, while a reading below 0 indicates contraction. 

The Conference Board announced on Tuesday its U.S. consumer confidence gauge fell 9.1 points to 125.1 in September from 134.2 in August.

Economists had expected consumer confidence to come in at 133.5.

August’s consumer confidence reading was revised down from originally estimated 135.1.

The survey showed that the expectations dropped from 106.4 last month to 95.8 this month, while the present situation index decreased from 176.0 to 169.0.

Lynn Franco, Senior Director of Economic Indicators at The Conference Board, noted, “Consumer confidence declined in September, following a moderate decrease in August. Consumers were less positive in their assessment of current conditions and their expectations regarding the short-term outlook also weakened. The escalation in trade and tariff tensions in late August appears to have rattled consumers. However, this pattern of uncertainty and volatility has persisted for much of the year and it appears confidence is plateauing. While confidence could continue hovering around current levels for months to come, at some point this continued uncertainty will begin to diminish consumers’ confidence in the expansion.”

S&P reported on Tuesday its Case-Shiller Home Price Index, which tracks home prices in 20 U.S. metropolitan areas, rose 2.0 percent y-o-y in July, following a revised 2.2 percent y-o-y increase in June (originally a 2.1 percent y-o-y gain). That was the smallest annual advance in house prices since August 2012.

Economists had expected an advance of 2.2 percent y-o-y.

Phoenix (+5.8 percent y-o-y), Las Vegas (+4.7 percent y-o-y) and Charlotte (+4.6 percent y-o-y) recorded the highest y-o-y gains in July.

Meanwhile, the S&P/Case-Shiller U.S. National Home Price Index, which measures all nine U.S. census divisions, was up 3.2 percent y-o-y in July, remaining the same from the previous month.

U.S. stock-index futures rose moderately on Tuesday as hope for progress in U.S.-China trade talks increased.

Global Stocks:

Jane Foley, the senior FX strategist at Rabobank, notes the UK’s Supreme Court ruling that PM Johnson’s advice to the Queen regarding the prorogation of parliament was unlawful has failed to lift the veil of political uncertainty that hangs over the pound.

• “Latest opinion polls put the Tories ahead on 33% of the vote. A government majority could be formed with the Brexit party (on 13% of the vote) and potentially a small party such as the DUP. Alternatively, a broad coalition led by the labour party and supported by the Lib Dems and Greens could be result from an election. On the first outcome the risk of a hard Brexit on January 31 would spike and on the second outcome the risk of a new Brexit deal or even an ‘Remain’ outcome would increase. For GBP the risks remain binary and as yet little altered by today’s Supreme Court ruling.
• Our central view is that the Brexit start date will be delayed beyond October 31 in line with the legislation that was pushed through parliament earlier this month. On this scenario we expect EUR/GBP to be trading in the 0.90 area on a 3-month view.
• If a Brexit deal were struck between the UK and the EU in the coming weeks, we would expect EUR/GBP to recover to the 0.85 area and for GBP/USD to push towards 1.30. On a no-deal Brexit on January 31 we see risk of EUR/GBP spiking towards parity.”

(company / ticker / price / change ($/%) / volume)

Walt Disney (DIS) initiated with Outperform at Wells Fargo; target $173

Netflix (NFLX) target lowered to $350 from $515 at Pivotal Research Group

Apple (AAPL) upgraded to Buy from Hold at Jefferies

Snap (SNAP) upgraded to Buy from Neutral at Guggenheim; target $22

• Says ECB moved ahead of the curve 
• There was a clear consensus on the need of action, a clear consensus that the action will be in the form of package of measures

• Supreme Court ruling is not right but we will respect it
• There is a good case for getting on with the Queen's speech
• "As the law currently stands, the UK leaves the EU on October 31, come what may"
• We are going to get on and deliver Brexit on Oct 31
• "Parliament has been debating Brexit for three years solidly now is the chance for us to get a deal, come out of EU on October 31 and that is what we are going to do"
• Of course, Parliament will come back
• Getting a deal is not made much easier by this kind of stuff in parliament or the courts

Earlier today, the UK Supreme Court ruled that Prime Minister Boris Johnson’s suspension of Parliament was unlawful, void and of no effect and should be quashed.

John Bercow, the Speaker of the House of Commons,  announced that UK Parliament would resume at 11:30 a.m. local time on Wednesday.

• TLTROs and tiering to mitigate side effects of ECB policy
• Tiering lowers risk of pressure on money-market rates
• Tiering to save banks about 4B euros per year
• We face a more-protracted economic slowdown than previously anticipated

Analysts at TD Securities are expecting the U.S. Conference Board's consumer confidence index to decline modestly to a still-solid 133.3 in September from 135.1 before.

• “The strength of the index continues to be the result of a solid labor market, despite the recent slowdown in the pace of hiring.
• Separately, the Richmond Fed manufacturing index is projected to stay unchanged at 1 for September following the sharp 13-point jump in the prior month. The stabilization in the index would fall right in the middle of the NY Empire and Philly Fed surveys, which are giving divergent signals for the sector in September.”   

Robert Both, the macro strategist at TD Securities, notes that Canada's household balance sheets for 2019Q2 showed slight progress in the deleveraging process.

• “Canadian households still owe $1.77 for every dollar of income and spend 14.9% of disposable income on debt payments, which represents a significant headwind to future consumption growth.
• The deleveraging process will take time and leave debt-service ratios elevated over the projection horizon. We estimate that every 1% rise in the debt-service-ratio coincides with a 0.1-0.2pp drag on consumption over the following year.
• Complicating matters is an already low savings rate. Further declines can provide a slight boost to consumption, but should households prioritize saving to guard against future rate hikes it would result in a more sluggish pace of spending.”

Analysts at Deutsche Bank note that, since the resumption of trade talks, markets have significantly reduced their bearish RMB positions.

• “DTCC data shows that around 40% of long USD/CNH trades have been unwound since the comment on 4th of September suggesting talks might get back on track. This is similar to what happened following the Osaka meeting earlier this year.
• In addition, based on a simple relationship with weighted average tariffs imposed on imports from China, and the move in USD/CNH; the market is effectively pricing in not just a suspension in tariffs at current levels (7.08 as of writing) but in fact part/ complete reversal of the last round of tariffs (15%) imposed on around $110bn of goods at the start of this month.
• We think given the multiple potential catalysts for escalation – intervention in HK (a US Congress bill on Human Rights could prove very contentious), US sales of F-16s to Taiwan, etc. – the risk is again skewed towards disappointment versus what is in the price.”

The latest survey by the Confederation of British Industry (CBI) showed on Tuesday the UK manufacturers’ order books remained below normal in September, and to a much greater extent than in August.

According to the report, the CBI's monthly factory order book balance decreased to -28 in September from -13 in the previous month. Economists had expected the reading to drop to -18.

According to the report, export order book gauge also declined sharply to -32 from -15 in August, compared to a long-run average of -17. Meanwhile, the present stocks of finished goods were reported as above adequate (+28, the highest balance since May 2009).

The survey also revealed the measure of manufacturers’ output expectations in the coming quarter fell to -19, the lowest balance since April 2009. Expectations for growth in average selling prices for the coming three months (+12) accelerated to pace above the long-run average of +3. 

• House price correction, slow rent growth, Government efforts to ease cost of living  
• Low wages growth one of the factors contributing to weak inflation outcomes
• U.S.-China trade, technology dispute the most prominent global risk 
• Risks to пlobal economy tlilted to the downside led by geopolitical uncertainties 
• Seeking to understand the slowing in Australia's economy and the disparity between strong unemployment growth and weak output growth
• Inflation to pick up, but remain below the 2-3% target range for some time to come
• RBA says that if we need to ignore these shifts our exchange rate would appreciate as the Australian economy reaches a "gentle turning point"

China’s efforts to open up its economy have not been enough to improve foreign companies’ access into the domestic market, according to a paper released on Tuesday by the European Union Chamber of Commerce in China.

One major hurdle that foreign firms operating in China face is the presence of Chinese state-owned enterprises, the paper said. Those firms, also known as SOEs, receive preferential treatment from the government such as priority to get financing — and that special treatment distorted competition in many industries, according to the report.

The situation has worsened in recent years with the Chinese government “pursuing SOE reform with Chinese characteristics,” it added.

“Rather than cutting SOEs down to a manageable size, determining the industries that would be most appropriate for them to operate in and privatising the rest, the goal has been to make them ‘stronger, better and bigger’,” Joerg Wuttke, the chamber’s president, wrote in the report.

Wuttke said China has made some inroads in terms of restructuring its economy in recent years. But the authorities have appeared to support growth by pumping more money into the economy, not by making the much-needed reforms, he said. “Sometimes, you want actually China to wake up and see you can’t only throw money at the economy. You actually have to change the structure,” he said.

In view of analysts at TD Securities, global growth fears lending a hand to precious metals prices, as demand for safe haven assets continues to grow, but the market is watching for potential implications on US growth.

“With the market pricing in just about 50% probability of an October cut, precious metals could see a bid in the near-term. In this context, we'll be keeping an eye on core PCE measures, along with a steady stream of fedspeak for the week with several members on the docket. As European manufacturing data disappointed the market, the release of the Chinese manufacturing PMIs over the coming weekend will be another important set of data for base metal traders to chew on, which will provide insights for the path of global growth moving forward. Aside from the Chinese data, any substantial trade headlines or signs of stimulus heading into China's Golden Week and the higher-level trade negotiations will also be major sentiment drivers.”

The U.S. and China are not heading into a “cold war” even though trade tensions have escalated, said Jean Lemierre, chairman of France’s largest lender, BNP Paribas.

“I do not believe it’s the beginning of a cold war. First, because I have been trained at the time of the Cold War, I know what it is — and this is not what I see today,” he told CNBC.

“Yes, there are tensions, there are frictions, but I think everybody has understood the benefit of cooperation, if not globalization,” said Lemierre.

The U.S. and China have been embroiled in a trade dispute for more than a year and both sides have raised tariffs on billions of dollars of each other’s goods. Despite numerous rounds of negotiations, there has been no breakthrough.

But Lemierre said he was not overly concerned about those developments. “Trade is trade. Trade is about negotiations. When there are negotiations, there are tensions, and I’m not so much worried about this type of incident, as you mention. That’s part of the negotiation process,” he said.

He acknowledged that “the world is waiting for any kind of conclusion about what’s happening,” but added: “It will take time but once more, trade is about negotiation, tensions, and I hope it will be fixed.”

Britain ran a smaller than expected budget deficit last month but borrowing in the financial year to date rose by more than a quarter ahead of the country’s planned departure from the EU next month.

Office for National Statistics said, public sector net borrowing in August totalled 6.418 billion pounds, excluding public-sector banks, down from 6.917 billion in August 2018 and below economists’ forecast (7.15 billion pound deficit).

Looking at the five months since the start of the current tax year in April, borrowing was up 28% percent from the same period in 2018.

Tuesday’s figures reflected a change in the ONS’s treatment of student loans, to take account that around half of them will not be repaid. This added 12.4 billion pounds to the borrowing figures for the 2018/19 financial year that ended in March, the ONS said.

Along with corrected corporation tax data and changes to the way public sector pensions are recorded, the ONS estimated the deficit excluding public sector banks for 2018/19 at 41.4 billion pounds rather than 23.6 billion previously — or 1.9% of GDP instead of 1.1%.

According to the report from Ifo Institute for Economic Research, the headline German IFO Business Climate Index came in at 94.6 in September, firmer than last month's 94.3 and beating the consensus estimates (94.4).

Meanwhile, the Current Economic Assessment arrived at 98.5 points in the reported month as compared to last month's 97.3 and 97.0 anticipated. The IFO Expectations Index – indicating firms’ projections for the next six months - came in at 90.8 for September, down from previous month’s 91.3 reading and missed market expectations of 91.8.

According to the report from Insee, in September 2019, the business climate has gained one point, compared to August. The composite indicator, compiled from the answers of business managers in the main sectors, stands at 106, above its long-term mean (100). Compared to the previous survey, the business climate indicator has bounced back by four points in retail trade and has gained one point in services and in building construction. It has lost one point in manufacturing industry, and, compared to July, in wholesale trade. The business climate is above its long-term mean in all those sectors.

In September 2019, the employment climate has improved very slightly after having edged down in the previous month: the associate composite indicator stands at 106, above its long-term mean. The decrease in the balance of opinion on past change in workforce size in non-interim services is offset by increases in the balances in the other sectors, in particular with regard to the projected staffing in temporary employment agencies and in retail trade.

• Fiscal policy must be used to help economies.

• Global economy looks increasingly uncertain.

• I supported many elements of new stimulus package, including state-dependent forward guidance and introduction of tiering.

• Was not in favor of the resumption of net asset purchases at this time.

• ECB bond buying is not needed right now.

• I thought further purchases are unnecessary right now given very low levels of long-term interest rates and term premia.

• Significant strengthening of forward guidance, the consequent of longer reinvestment period and the DFR cut, are already powerful.

• Our forward guidance is now strongly “state based”, reflecting our enhanced commitment to reach our objective.

• This is significant progress that has perhaps been overshadowed by the arguments over QE

In view of Danske Bank analysts, today's calendar is a blend of politics and data and the German Ifo will be closely monitored. 

“Both the expectations and current situation components have been on a falling trend for the past year and we are very interested to see if it will follow the more upbeat Zew expectations from last week or reflect the weak PMIs we saw yesterday. In Sweden, the Parliamentary Committee on Finance will hold an open hearing on the current monetary policy at 09.30 CEST. In the UK, the Supreme Court is expected to rule on Prime Minister Boris Johnson's suspension of Parliament at 11.30 CEST. The Hungarian central bank (the MNB) will hold its monetary policy meeting. We expect the key rate to remain unchanged at 0.90%. As the ECB has prolonged its dovishness, Hungarian inflation continues to decelerate and business confidence has slid dramatically, we expect the MNB will be dovish again, adding pressure on the HUF in the short and mid-term.”

China is in no rush to follow other countries in significantly loosening monetary settings but has ample options to help prop up slowing growth, its central bank head said, maintaining its cautious approach to stimulating the economy.

People's Bank of China (PBOC) governor Yi Gang said macro-economic policies have significant room to move, especially on the fiscal and monetary fronts.

"But we are in no hurry to take measures similar to central banks of other countries...such as interest rate cuts or quantitative easing policies," Yi said.

China cut its new one-year benchmark lending rate for the second month in a row on Friday, as the central bank seeks to lower borrowing costs to support smaller firms affected by the trade war and wider slowdown.

Yi said there was still plenty of room to manoeuvre on monetary policy, though such options but should be "cherished". He also said that authorities would maintain "normal" monetary policy for as long as possible. "China's monetary policy will maintain its prudent orientation," he said.

• BoJ must pay more attention than before to heightening risks, particular focus in on the output gap

• Economy sustaining momentum for hitting BoJ's price goal

• BoJ can combine, enhance tools which are rate cuts increase in asset buying and acceleration of base money

• Our policy is stimulating economy, but increased scrutiny is needed on cost of prolonged ultra low rate environment

• If Oil prices continue to fall and clearly push down Japan's inflation, that could impact inflation expectations

• No preconception on what policy decision will be made in October

• Investors risk aversion easing somewhat due to progress in US-China trade negotiations

• Excessive fall in super-long yields could hurt consumer sentiment by lowering returns of pension, insurance funds

• Overseas economic slowdown yet to affect Japan's domestic demand

Final data from the Cabinet Office showed that Japan's leading index rose marginally in July.

The leading index, which measures the future economic activity, rose to 93.7 in July from 93.6 in June. According to initial estimate, the score had remained unchanged at 93.6 in July.

The coincident index that reflects the current economic activity increased to 99.7 in July from 99.5 in the preceding month. The preliminary estimate was 99.8.

The lagging index climbed to 104.7 in July from 104.5 in the prior month. The reading was revised down from 104.8.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1162 (1910)

$1.1125 (2070)

$1.1080 (1429)

Price at time of writing this review: $1.0988

Support levels (open interest**, contracts):

$1.0941 (3053)

$1.0896 (2268)

$1.0848 (766)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date October, 4 is 96060 contracts (according to data from September, 23) with the maximum number of contracts with strike price $1,1050 (13342);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2604 (1428)

$1.2549 (847)

$1.2513 (509)

Price at time of writing this review: $1.2433

Support levels (open interest**, contracts):

$1.2375 (904)

$1.2346 (571)

$1.2311 (781)

Comments:

- Overall open interest on the CALL options with the expiration date October, 4 is 16700 contracts, with the maximum number of contracts with strike price $1,2500 (1792);

- Overall open interest on the PUT options with the expiration date October, 4 is 18386 contracts, with the maximum number of contracts with strike price $1,1900 (1422);

- The ratio of PUT/CALL was 1.10 versus 1.10 from the previous trading day according to data from September, 23

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.