ALPHA Market Update 25 October 2018

25.10.2018

Market Update

 

 

 

United States

  • The impact of interest rate hikes has once again appeared. In September, when the Fed announced the third rate hike this year, the number of new homes and existing home sales reached a new low of nearly two years and nearly three years. The 30-year mortgage rate announced last week rose above 5%, a record high of more than seven and a half years.
  • Trump directly criticized the Fed and Chairman Powell again: “Every time we do something good, the Fed raises interest rates.” When asked if he regretted nominating Powell, Trump thought that “it is too early to say this now,” but added One sentence is “possible”
  • Many Democrats in the United States have received suspicious packages suspected of containing bombs. Targets include: former President Barack Obama, former President Clinton and a package containing unexploded bombs sent to CNN’s New York headquarters, containing unknown white powder, and the Democratic Party of California are also threatened, and the US stock market has suddenly expanded.
  • Core Durable Goods Orders and Initial Jobless Claims will be released at 13:30
  • Pending Home Sales data will be announced at 15:00
  • The S&P 500 index closed down 3.09%. The Dow Jones fell 2.41%. The NASDAQ fell 4.43%, the biggest one-day drop since August 2011.

GBP

  • GBP/USD is trading around 1.2900, a tad higher on the day. UK Brexit Secretary Dominic Raab remains optimistic about reaching a Brexit deal but criticizes the EU for its “intransigent ” approach. US Durable Goods Orders is coming up.
  • Brexit negotiations are stuck on the related issues of the Irish border and customs arrangements. The EU Summit broke up last week without a deal and the clock is ticking towards Brexit Day on March 29th, 2019.

 

Europe

  • Germany will be forced to pay an extra £13.2billion a year to the EU after Brexit, in a move that has sparked fury among Germans who are already the bloc’s biggest contributors. Germany must find the extra cash to make up the EU’s budget shortfall after the UK leaves the bloc. The amount will increase Germany’s gross annual contribution to Brussels to a massive £40 billion. The huge sum will help to fill the massive hole in the EU’s budget after Brexit Britain pulls out of Europe. The payment, revealed in a report published by the EU’s finance ministry, has provoked anger among Germans.

Australia

  • AUD rose into the mid-week session as it tracked the Chinese stock market in its recovery off multi-year lows, and analysts at both Westpac and Commerzbank are suggesting it could move higher still. China’s stock markets have suffered severe losses in 2018 but they’ve rebounded in recent days as markets respond to pledges from the Ministry of Finance to cut taxes this year and next in order to support the economy in the face of President Trump’s trade war against the country. Efforts by authorities to prevent a pickup in capital outflows from China may also have propped up stocks in Shanghai and supported the Renmimbi. A UBS Group private banker was recently detained, with markets taking it as a sign of authorities attempting to prevent money from leaving China. “AUD outperformed most major currencies during the Asia session supported in part by higher Chinese equity markets. The CSI300 index is up about 1.75%. But Chinese policymakers will likely need to implement more reflationary policies to shore-up financial market conditions on a sustained basis,” says Elias Haddad, a currency strategist at Commonwealth Bank of Australia.

New Zealand

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