Market Brief: Optimism Over Potential Brexit and US-China Deals Rules the Day
Matt Weller, CFA, CMT October 10, 2019 4:00 PM
- Risk assets rallied today on hopes for a deal on both Brexit and US-China trade. UK PM Johnson had a “positive and promising” meeting with Irish PM Varadkar, stoking optimism that the UK and EU will be able to reach a deal next week (prediction markets remain skeptical).
- Separately, reports suggested there was a chance of a partial trade deal around agricultural purchases and currency levels between the US-China. While it would be far from the “big”, all-encompassing deal that President Trump has expressed a desire for, any progress would be better than traders expected earlier this week.
- FX: The pound was by far the strongest major currency on the day, rising by more than 1.5% against its major rivals. The yen was the weakest major currency in risk-off trade.
- US data: In another sign of a potentially slowing economy, US CPI came in at +1.7% y/y, below the 1.8% reading expected. Core CPI (ex food and energy) came in at 2.4% y/y as expected. That said, initial jobless claims dropped to 210k vs. 219k expected and previous, as the US labor market remains an economic bright spot.
- Commodities: Gold dropped -1% on the day on declining safe haven demand, while oil tacked on more 2% today.
- US indices closed higher on the day, though off their highest levels.
- Energy (XLE) was the strongest sector on the day, boosted by the big rally in oil prices. Utilities (XLU) were the weakest.
- Stocks on the move:
- Utility PG&E (PCG) dumped -29% after a judge ruled to allow bondholders to push for the company’s bankruptcy.
- Delta Airlines (DAL) dropped -2% after issuing weaker-than-expected guidance for next quarter.
- Ra Pharmaceuticals (RARX) exploded 101% higher after Belgian pharmaceutical company UCB agreed to acquire the company for $2.5B.
- Kroger (KR) shed -3% after an analyst at Jefferies criticized the grocer’s investment in Ocado.
- Retailer Bed, Bath, and Beyond (BBBY) rocketed 21% higher after announcing former Target executive Mark Tritton as CEO.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.