Trump signs Hong Kong Bill in support of Protesters
In this week's market brief, the top three market movers have been, Trump’s signing of a Hong Kong bill that supports the protesters drives a wedge between the two sides. Sterling gained ground as markets continue to price in a Tory victory at December's general election. Data published by the OECD showed that global trade fell again in Q3 2019.
Here's what has been moving the markets this week, Asian markets have been mixed, as the impact over Trump’s signing of a Hong Kong bill that supports the protesters drives a wedge between the two sides. The Chinese have spoken of retaliation, this certainly doesn’t help affairs when markets are waiting patiently for a phase one deal that many had assumed would be signed by now. The US markets were closed on Thursday for Thanksgiving, and only open for just half the session on Friday.
Data by the OECD showed that global trade fell again in Q3 2019, exports down 0.7 per cent and imports off 0.9 per cent. They add that trade was weak across all G20 countries but the slowdown was more prominent in the European Union, exports falling 1.8 per cent and imports shrinking 0.4 per cent.
The general election is potentially an opportunity to move us out of uncertainty in the UK, but for this to happen there must be a clear result. A hung parliament could be the most damaging for consumer confidence and would surely deepen the obvious dissatisfaction. Political parties will need to satisfy voters that they will be effective for the wider economy and that people will be better off next year and beyond. Sterling did gain this week as markets continue to price in a Tory victory at December's general election, with YouGov's MRP model pointing to a 68 seat majority.
As expected, the trend hasn't changed yet. As consumers try to find the best Black Friday deals, crypto markets remain uninspiring. To add to the Thanksgiving impasse, both open interest and premium have remained fairly stable. But it seems that premium is slightly down while open interest is slightly up, which hints at fresh shorts clinging over the end of the month weekend ahead of us.
The top cryptocurrency has closed below the 50-week moving average. In May 2018, for instance, bitcoin fell below the 50-week MA at $7,619 and remained below the average for 12 months. By December 2018 the price was near $3,100 . Before that, the drop below the crucial average support at $535 in August 2014 was followed by a deeper sell-off to $152 by January 2015. It could be different this time, of course, as markets may put a bid under the cryptocurrency ahead of the reward halving due in six months.
The reward granted to Bitcoin miners for adding a block to the blockchain will be reduced from the current 12.5 BTC, down to 6.25 BTC following the halving. In the past, the cryptocurrency has put on a good show in the months leading up to the event. Note that this process is repeated every four years.
Looking ahead to next week, the economic data calendar is busy, while geopolitical issues will continue to dominate newswires. Investors risk appetite will continue to be determined by developments in the US-China trade war, with particular focus likely to be placed on any retaliatory action from China in response to President Trump's signing of a Bill seen as being in support of Hong Kong protesters.
Meanwhile, sterling will remain driven by shifts in sentiment towards the election result as we approach polling day on the 12th December. Signs that the Conservatives are maintaining their lead should see the pound strengthen.
On the data front, market participants will be able to gauge the health of the global economy, with both manufacturing and services PMIs due from all major economies. Other noteworthy releases include third quarter Australian GDP, as well as the latest labour market reports from both the US and Canada. Finally, a few central bank policy decisions are due next week, from Australia and Canada. Both the RBA and BoC are expected to leave rates on hold, though focus will be on the policy outlook, with any hints of looser policy in there forward guidance.