Global equities recorded gains yesterday boosted by a positive lead from Asia with the Shanghai Composite leading the way following the announcement of additional stimulatory measures from China late on Monday. US earnings results also boosted US equities, although after a solid start the tech heavy NASDAQ closed flat for the day. China’s news also boosted commodities and helped the AUD climb to the top of the G10 leader board. Core global yields had a stable session, but longer dated JGBs remain under pressure.
To mark my 1625th issue of TraderNoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoble.com for details
For anyone following my Platinum Service it made 21 points yesterday and is now ahead by 933 points for July, having made 994 points in June, 1927 points in May, 1657 points in April, 1760 points in March, 2256 points in February, 879 points in January and 946 points in December. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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The improvement in risk appetite that began just after I posted early yesterday morning came off the back of news late on Monday that China had unveiled a package of targeted policies to boost domestic demand intended to form a more flexible response to ‘’external uncertainties’’. This when combined with recent policy easing steps suggest China is undertaking a co-ordinated stimulus in response to trade tensions. Meanwhile, the Trump administration announced an emergency-aid package of $12bn for farmers aim as an offset from China’s trade retaliation. Ahead of the farmers relief news, President Trump toughens his trade stance in a series of tweets noting that “Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs’’. Then speaking in Kansas and ahead of trade talks with Europe this afternoon the president said that ‘’What the European Union is doing to us is incredible, how bad,, They sound nice but they are rough’’.
So although equities and risk assets in general enjoyed a good session, it seems that the masters of war are gearing up for battle. China on the one hand looks to be playing the long game, introducing stimulatory measures while also showing tolerance to CNY weakness. China’s equity markets is starting to show some stability and the negative side effects from CNY weakness are seemingly contained for now as there is no evidence of capital outflows typically associated with a currency crisis. Meanwhile president Trump is not only ramping up the rhetoric, he has now also introduced offsetting measures against China’s retaliation. The threat of even larger tariffs is keeping the market weary and it does not seem like anyone will be blinking any time soon.
Equities
After a positive lead from Asia (Shanghai Composite 1.61%) and Europe, the S&P 500 gave up some of its early session gains, but still managed to close the day up 0.48%. The NASDAQ made a new record high, supported by better than expected earnings from Alphabet (Google) after the bell yesterday, but it was unable to sustained the move retreating half way through the session and closing flat for the day. All major European equity indices recorded gains with the DAX leading the way, up 1.12%
Currencies
USD Indices are little changed after recovering following the Trump’s administration offer to help US farmers. AUD is the outperformer in G10, +0.47%, following China’s news and a decent session for commodities. AUD now trades at 0.7424 and is still within its 0.7311-0.7484 range held since mid-June.
The CNY itself is also marginally stronger on the day, with the USD/CNY just below 6.80, although it remains near its weakest levels since June last year.
The EUR is slightly lower than this time yesterday, with the European Manufacturing PMI increasing slightly while the Services equivalent showed a small fall. The Manufacturing PMI remains well below the levels reached late last year, indicative of the European economy losing some momentum, but it remains at healthy levels overall. ECB meeting tomorrow will be the focus for the Euro.
Bonds
Core bond yields were reasonably stable, after relatively large rises over the preceding two days. The 10 year Treasury yield is down 1bp at 2.95%. The 10 year JGB remained at 0.075% although the 30 year JGB moved another 3bps higher to 0.798%.
Commodities
Copper and Zinc have led the gains in commodities, both up more than 2% with Aluminium and oil prices up just under 1%. Iron ore was essentially unchanged and gold was a smidgen softer, down 0.11%.
Economics
EC: Manufacturing PMI, Jul: 55.1 vs 54.7 exp.
EC: Services PMI, Jul: 54.4 vs 55.1 exp.
US: Manufacturing PMI, Jul: 55.5 vs 55.1 exp.
US: Services PMI, Jul: 56.2 vs 56.5 exp.
This morning on the Economic Front we have the German IFO Business Survey at 9.00 am including the Current Situation/Expectations. At the same time we have Euro-Zone Money Supply. This is followed at 9.30 am by UK BBA Mortgage Approvals. Next we have US MBA Mortgage Applications at 12.00 pm. Finally at 3.00 pm we have New Home Sales.
All that said the big event for today is the Junker-Trump (EU-US trade) meeting and it is hard to tell which way it is going to go. Earlier in the week the FT suggested Junker’s objective was for de-escalation of tensions implying no concrete outcomes are likely, Meanwhile over the weekend US Treasury Secretary Steven Mnuchin sounded more hopeful that some progress could be achieved.
September S&P 500
Unfortunately the S&P just missed my 2803 buy level by 4 Handles before rallying to an intra-day high over 2830. Subsequently we sold off before having a small rally into the close and I am still flat. Most analysts do not believe in this rally which is good explanation of why the market continues to firm. I still believe that we will break the January 26th high at 2878 before we finally look to roll over. Today I will now raise my buy level to 2800/2809 with a 2793 stop. Despite the low volume and weak internals I still do not want to be short the S&P at this time.
EUR/USD
No change as I am still a buyer on any dip lower to 1.1600/1.1640 with the same 1.1565 stop. With the EU/US Trade Tariff discussions getting underway later today I still do not want to be short the Euro at this time.
September Dollar Index
No change as I am still a small buyer on any dip lower to 93.40/93.85 with the same 93.05 stop.
September DAX
The DAX fell short of my buy level before the market rallied 150 points as thankfully we had no sell levels in this market yesterday. Today I will again raise my buy level to 12480/12550 with a 12415 stop. Ahead of today’s Tariff talks I still do not want to be short the DAX at this time.
September FTSE
The FTSE came within a few points of my buy level yesterday before also trading higher and I am still flat. Today I will now move my buy level slightly higher to 7550/7590 with a 7520 stop.
Dow Rolling Contract
The Dow was the strongest of the US Indices yesterday as the market came short of my 25350/25500 sell range with a 25287 high print before selling off over 100 points, before like the S&P having a small rally into the close. I am still flat and today I will now tighten my sell range to 25390/25500 with the same 25570 stop. I will also raise my buy level to 24930/25080 with a 24860 stop.
September NASDAQ
Frustratingly the NASDAQ just missed my 7510 sell level by 20 points before having a hefty 100 point sell-off and I am still flat. Today I will now lower my sell level to 7480/7530 with a 7565 stop. I will also lower my buy level slightly to 7300/7350 with a 7255 stop.
September BUND
I am still flat the Bund which having sold off early managed to rally into the close. The market should continue to firm ahead of the ECB Meeting tomorrow. For this reason I will now raise my sell level to 162.80/163.25 with a 163.55 stop.
Gold Rolling Contract
No change as I am still a buyer on any dip lower to 1205/1216 with the same 1198 stop.
Silver Rolling Contract
Silver finally rallied to my 15.60 T/P level on my latest 15.39 long position. Subsequently I emailed my Platinum Members to re-buy the market at 15.50 with the same 14.95 stop. I am still long and I will have a T/P level at 15.75 on this position. If any of the above levels are hit I will be back with a new update for my Platinum Members.
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