US President Trump blasts adversaries at UN, faces impeachment proceedings in Washington

Stocks fall and bonds climb on risk-off atmosphere

A bombastic speech at the UN from US President Trump, coupled with fresh US political turmoil, which could lead to impeachment proceedings against US President Trump, sent stocks tumbling on Wall Street last night. It took the shine-off earlier news that the UK Supreme Court had ruled UK Prime Minister Boris Johnson’s decision to suspend UK Parliament last month was “unlawful”, putting another obstacle between the UK PM and a hard-Brexit. Closer to home, the Australian Dollar rallied off-the-back of a speech delivered by RBA Governor Lowe. And in the day ahead, traders turn their attention to the RBNZ rate-decision this afternoon.

US President Trump uses UN speech to blast his adversaries

US President Trump didn’t hold back in his address to the US General Assembly last night. Few political issues escaped his ire, condemning the audience’s “globalists”, attacking America’s social-media giants, lashing out at Iran, weighing in on tensions in Hong Kong, and – perhaps surprisingly, and definitely most concerningly, for markets – re-adopting a hostile stance against China and its economic and trade practices. The whole speech came as somewhat of a shock to market participants, who moved quickly to re-price the risk that the recent niceties exchanged between the US and China on trade may, ultimately, one again, amount to nothing.

US politics another risk added to the shopping-list

The series of knots tied by US President Trump, that’s entangled market participants overnight only became tighter upon reports that US Democrats are planning to commence an impeachment inquiry against the US President, in response to allegations that he pressured Ukraine’s President to begin a corruption investigation into former Vice President Joe Biden. The impact on markets from that event was softened somewhat, after the US President stated he would be releasing the transcript of the telephone conversation at the centre of this controversy. Nevertheless, the news proved a blow to market sentiment, with US political-risk now added to the market’s growing-list of risk factors.

UK Supreme Court smacks down Johnson Government

There was some good news for market participants last night, even if it was drowned out by events surrounding US President Trump. The UK Supreme Court ruled that UK Prime Minister’s decision to prorogue parliament last month was “unlawful”, on the grounds that it “had the effect of frustrating or preventing Parliament from carrying out its constitutional function”. The decision will likely see the immediate recalling of UK Parliament, and puts another obstacle in the way of a hard-Brexit. The Pound relished the news, as-a-result, rallying back towards the 1.25 handle during overnight trade, as traders now beg the question: “what next?”.

RBA Governor speaks of economy’s “turning point”

Of local importance, RBA Governor Philip Lowe delivered a speech overnight entitled “An Economic Update”. Though expected, coming into the speech, to outline the RBA’s case for a rate-cut next week, Governor Lowe proved much more sanguine. He spoke up the fundamentals of the Australian economy, suggesting it’s now at a gentle “turning-point”. Not to back himself into a corner, Governor Lowe did say the RBA would “again take stock of the evidence” for and against another rate cut. All-in-all, however, the market judged Governor Lowe’s speech to be “less-dovish” than expected, with the implied chance of a rate-cut next week falling to 63%.

RBNZ meet and will likely keep rates on hold

The RBNZ meet and take centre stage in the Asian region today. After shocking markets last month with a rare 50-basis point cut, the market believes that the RBNZ will be sitting on its hands this meeting. Only a 15% chance of a 25-basis point cut is being given. A familiar “wait-and-see” language is expected from the central bank this month, as the impacts of its “double-cut” last month works its way through the New Zealand economy. The next rate cut from the RBNZ, according to market pricing, ought to come in November. Today’s meeting will be used to judge the accuracy of that assumption.

Cryptos inexplicable sell-off

In news that didn’t take too much attention overnight, perhaps because of its obscurity, was the massive sell-off in crypto-currencies. It was led by a considerable 15% fall in Bitcoin, with other cryptos following, and sustaining even greater losses. In the murky, and sometimes nefarious world of crypto-currency markets, a compelling explanation for the move is hard to ascertain. Numerous reasons, ranging from technical market-factors to shifts in market sentiment have been provided. None are overly convincing. What can probably be said safely is that in an immature, unregulated and speculative market like cryptos, these things will periodically happen.