Assessing the market optimism
Global equity markets collectively cheered the G20 outcome at the start of the week but may find this optimism cooling into the Tuesday session for markets.
US proposes new EU tariffs
Wall Street surged at the start of the fresh week, no surprise here seeing the likes of the S&P 500 index chalking up a fresh record. This is with cyclicals at the forefront, the IT and financial sectors leading the gains, with the former aided by the surprise news on Huawei from President Donald Trump. That said, the sustainability of this upward movement remains in question with the uncertainty continuing for geopolitical tensions.
As it is, we have seen the latest news of the US bringing forth another $4 billion worth of EU goods for proposed tariffs shining the spotlight on EU-US trade relations. EUR/USD was seen falling into the Monday session though supports comes in fast at around $1.126 that could keep further downsides intact into Tuesday.
Source: IG Charts
PMI numbers suggest weakness
Over and above the trade concerns, the PMI readings out of both US and China had perhaps been evidence that one should contain the optimism despite the trade truce. Both China’s official and Caixin manufacturing PMI had missed estimates with the latter surprising in contractionary territory at a 5-month low of 49.4. Similarly, in the US, June’s ISM manufacturing PMI had slumped to the lowest since late October at 51.7. For China’s data, new orders on both counts of the official and Caixin manufacturing numbers had remained in contraction territory. All of which, paints a picture of continued pressure from the on-going tariffs that have yet to receive respite despite the trade truce.
The implications of the economic weakness seen from these early June numbers on markets would perhaps be one calling for greater caution with the data releases moving forward. The silver lining would be the support expected from the Fed and the Chinese authorities.
Mixed Asia markets
Asia markets can be seen mixed going into the Tuesday session with the markets moderating some of the positive glow after the sentiment-driven trade on Monday.
The wait is on for the Reserve Bank of Australia’s meeting in light of the contemplation as to whether we will be seeing a cut coming through this meeting. The consensus for a cut has seen to the AUD softening ahead of the meeting, one to watch.
Yesterday: S&P 500 +0.77%; DJIA +0.44%; DAX +0.99%; FTSE +0.97%
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 40
- The only provider to offer 24-hour pricing
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
