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Global Markets Recover on US/China Trade Talk News

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Equities

Major US indices closed lower on Wednesday, weighed down by the concerns that Turkish crisis might spread and have a negative impact on the global economy. The Dow Jones industrial average traded below 25000 during the session and settled at 25162, the SPX500 lost 0.7% to 2818, and the Nasdaq Composite Index fell by 1.2% to close at 7774. During the Asian session, China announced that a delegation led by China’s Vice Commerce Minister is heading to the U.S. for trade talks in late August. The news provided support to the falling markets and boosted investors’ risk appetite. Indices recovered and traded higher as a trade deal between China and the US will lessen the risks to the global economy.

USD

The dollar index which measures the greenback against a basket of major currencies retreated from 96.98, its highest level since late June 2017. The dollar is trading lower against major peers except for the Japanese Yen, and the emerging market currencies are still recovering. The EURUSD is hovering near the session high at $1.1380, and the USDJPY inched higher towards 110.80 as investors jumped into risky assets. On the other hand, the Turkish Lira continued to recover against the United States dollar where the pair dropped to a low of 5.70. The Lira found support after Qatar’s Sheikh Tamim bin Hamed Al Sani pledged to invest $15 Billion in Turkey. Moreover, the USDCNY fell from a nineteen-month high of 6.93 to trade at a low of 6.88. 

GBP

The British Pound extended its losing streak against the United States Dollar despite the nudge up in the inflation numbers. The July Consumer Price Index rose to 2.5% from 2.4% prior and the Core Consumer Price Index remained at 1.9%. The pound has been suffering due to the rising chances of Britain leaving the European Union without a trade deal, and the strengthening US dollar. The GBPUSD traded at a fourteen-month low of $1.2662. However, the pair bounced off the lows as the greenback weakened. The retail sales figures for the month of July are due today, a better than expected reading could support the pound.

Metals

Gold prices tumbled to the lowest levels since late December 2016 despite rising uncertainty, falling stock market, and lower US Treasury yields. The gold ounce traded at a low of $1160 during the Asian session. However, the dollar pullback helped the precious metal to trade back near the opening level at $1175. On the other hand, the silver ounce traded at a $14.35, its lowest level since February 2016.

Oil

Oil prices tumbled as the EIA reported a buildup in the US crude inventories. The Energy Information Administration announced that the crude oil inventories rose by 6.805 million barrels last week versus an expectation of a drop of more than 2 million barrels. The report weighed on the oil prices where the West Texas Intermediate crude futures fell to a low of $64.54 per barrel, and the Brent futures reached a low of $70.28 per barrel. However, energy prices recovered slightly post the trade talk news between China and the US.

Major Economic Events

GMT Country Event Expectation Previous
8:30 UK Retail Sales (MoM) (Jul) 0.2% -0.5%
8:30 UK Retail Sales (YoY) (Jul) 3.0% 2.9%
12:30 US Building Permits (Jul) 1.310 1.292
12:30 US Philadelphia Fed Manufacturing Index (Aug) 21.9 25.7
12:30 US Initial Jobless Claims 215 213

 
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