Risk-off sentiment is seeping into the markets again. Several factors are prompting investors to take a pause in recent buying. For starters, headlines on Sino-U.S. trade talks indicate the two sides can’t even agree on a schedule for the next round of talks. The Hong Kong and Macau Authority held a press conference about the continuing protests in Hong Kong. Comments continued to deride the “radicals” and condemn foreign government provocation. Additionally, there critical statements regarding the handling of the unrest by HK Chief Executive Lam’s administration. Israel and Hezbollah continue to exchange fire along the border with Lebanon.
However, the day’s most eye catching headlines pertain to Brexit. This evening in London, Parliament will vote upon a measure blocking a No Deal Brexit. In turn, PM Johnson threatens to call snap elections for Oct. 14 if passed. He has emphatically stated, he will not ask for an extension to the U.K. departure date from the E.U. on Oct. 31st. The £ has spent a fare portion of the morning trading below 1.20 for the first time in more than two years, building upon losses from yesterday.
The risk off mode is prompting yields to fall in the debt markets and inversion is being kicked around again. Commodity markets are seeing crude & copper off more than 1%
Asian equities saw a mix across the region. China ends the day to the upside following yesterday’s surge due to the Caixin Manufacturing PMI that unexpectedly moved back into expansion territory. India lags on disappointing GDP and a weakening INR. Investors worry about foreign investor outflows. Most sectors in the region end the day lower. Energy is off by more than 0.5% followed by real estate and financials. IT and industrials manage to gain while materials, utilities and consumer discretionary are steady.
Europe trading lower since the open but has pared declines. Turkey outperforms due to inflation data that at least shows the a slower rate. Most sectors are red. Energy if lower more than 0.5% with media down by
On the macro front, the RBA lest rates unchanged Down Under at 1.0%. S. Korean GDP and CPI were a touch light of expectations. Other political news is Giuseppe Conte is expected to form a government in Rome tomorrow.
- Xiaomi +4.2% intends to buyback up to $1.5b of its own shares.
- Plumbing supplier Ferguson +3.1% will restructure by splitting out its U.K. operations. This is a measure to appease activist investor Nelson Peltz.
- CNH Industrials -1.8% is preparing to spin-off its truck, powertrain and bus units.
- RBC is lowering price targets on both Swatch -3.0% and Richemont -2.0% citing the ongoing impact of the
- The FT reports Marks & Spencer -1.6% is at risk of being removed from the FTSE100.
On Our Side of the Pond
- Fairly quiet this morning following the Labour (not a typo) Day holiday.
- The ISM data will be watched closely.
Markets & Macro
|SK||GDP SA QoQ||2Q F||1.10%||1.00%||1.10%||—|
|SK||GDP YoY||2Q F||2.10%||2.00%||2.10%||—|
|SK||CPI Core YoY||Aug||0.90%||0.90%||1.00%||—|
|UK||BRC Sales Like-For-Like YoY||Aug||0.50%||-0.50%||0.10%||—|
|AU||ANZ Roy Morgan Weekly Consumer Confidence Index||1-Sep||—||114.4||114.1||—|
|JN||Monetary Base YoY||Aug||—||2.80%||3.70%||—|
|JN||Monetary Base End of period||Aug||—||¥515.9t||¥518.1t||—|
|AU||BoP Current Account Balance||2Q||A$1.5b||A$5.9b||-A$2.9b||-A$1.1b|
|AU||Net Exports of GDP||2Q||0.3||0.6||0.2||—|
|AU||Retail Sales MoM||Jul||0.20%||-0.10%||0.40%||—|
|AU||RBA Cash Rate Target||3-Sep||1.00%||1.00%||1.00%||—|
|UK||Markit/CIPS UK Construction PMI||Aug||46.5||45||45.3||—|
|CA||MLI Leading Indicator MoM||Jul||—||—||0.30%||—|
|CA||Markit Canada Manufacturing PMI||Aug||—||—||50.2||—|
|US||Markit US Manufacturing PMI||Aug F||50||—||49.9||—|
|CA||Bloomberg Nanos Confidence||30-Aug||—||—||57||—|
|US||ISM Prices Paid||Aug||46.8||—||45.1||—|
|US||ISM New Orders||Aug||50.5||—||50.8||—|
|US||Construction Spending MoM||Jul||0.30%||—||-1.30%||—|