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Trade war drags markets down once again
European markets were hit hard from the opening bell, once again feeling the trade tensions between China and the US, with the yuan expected to fall to more than 7 yuan/USD, and Trump once again asked the Fed to lower rates in order to the offset the impact from the Chinese currency. The measures announced late last night by the PBoC to halt the yuan’s devaluation should help calm the markets today. In the Euro Stoxx, all the sectors were in the red, led by cyclical sectors (Basic Materials, Industrials, Autos, Consumer Goods), whereas Media, Telecom, Utilities, Banks (despite the falling IRRs) and Chemicals recording the smallest losses. On the macro side, in the euro zone, August’s SENTIX index fell much more than expected and the final services PMI was cut slightly. In the US, July’s services ISM came in below expectations. In the UK, the labour leader Jeremy Corbyn has announced his intention to call a no-confidence vote on the Govt. after the summer in order to avoid a no-deal Brexit. This morning, in Japan June’s leading indicators fell in line with expectations. In US business results, Linde and Tyson Foods were in line with expectations and Marriott released worse earnings than expected.
What we expect for today
A mildly bearish opening in European stock markets, already closer to support levels and with the eyes set again on the trade war and yuan. Currently, the S&P futures are up +0.3% (the S&P 500 dropped -0.6% vs. its price at the closing bell in Europe). Volatility in the US rose to Jan’19 highs (VIX 24.6%). Asian markets are falling although to a lesser extent than yesterday (Hong Kong and Japan are both sliding -0.7%).
IBERIAN DAILY 06 AUGUST (ANÃLISIS BANCO SABADELL)
MARKETS YESTERDAY AND TODAYTrade war drags markets down once again
European markets were hit hard from the opening bell, once again feeling the trade tensions between China and the US, with the yuan expected to fall to more than 7 yuan/USD, and Trump once again asked the Fed to lower rates in order to the offset the impact from the Chinese currency. The measures announced late last night by the PBoC to halt the yuan’s devaluation should help calm the markets today. In the Euro Stoxx, all the sectors were in the red, led by cyclical sectors (Basic Materials, Industrials, Autos, Consumer Goods), whereas Media, Telecom, Utilities, Banks (despite the falling IRRs) and Chemicals recording the smallest losses. On the macro side, in the euro zone, August’s SENTIX index fell much more than expected and the final services PMI was cut slightly. In the US, July’s services ISM came in below expectations. In the UK, the labour leader Jeremy Corbyn has announced his intention to call a no-confidence vote on the Govt. after the summer in order to avoid a no-deal Brexit. This morning, in Japan June’s leading indicators fell in line with expectations. In US business results, Linde and Tyson Foods were in line with expectations and Marriott released worse earnings than expected.
What we expect for today
A mildly bearish opening in European stock markets, already closer to support levels and with the eyes set again on the trade war and yuan. Currently, the S&P futures are up +0.3% (the S&P 500 dropped -0.6% vs. its price at the closing bell in Europe). Volatility in the US rose to Jan’19 highs (VIX 24.6%). Asian markets are falling although to a lesser extent than yesterday (Hong Kong and Japan are both sliding -0.7%).
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Sabadell
Research Department
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