Top 5 Things in the Market on Thursday

1. Trump due to meet with trade advisors

President Donald Trump is due to meet with his top trade advisors ahead of Sunday’s deadline for the next round of U.S. import tariffs on Chinese goods, according to various reports.

The White House has not confirmed the meeting, but the reports suggest Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and White House advisors Larry Kudlow and Peter Navarro will be present.

The administration previously announced its intention to levy 15% tariffs on Chinese imports worth an estimated $160 billion annually. With no sign of a ‘phase-1’ deal with China being imminent, the meeting effectively boils down to a decision whether or not to delay the proposed measures. CNBC reported that officials had circulated talking points playing down the impact of the tariffs, which will cover many popular consumer goods.

2. No change seen at Lagarde’s first ECB meeting, but Turkey, Brazil cut rates

Christine Lagarde will chair her first policy-making meeting of the European Central Bank’s governing council.

The focus, however, will be on Lagarde’s first press conference, in as much as nobody expects any change in policy so soon after Mario Draghi’s farewell package of easing measures in September.

Lagarde is expected to announce the start of a thorough review into how the ECB conducts policy, something that is likely to cover how it defines its inflation target, the policy tools it uses to pursue it and the way it communicates its decisions. The last of those may assume particular importance as Lagarde struggles to forge consensus on a bank bitterly divided over the resumption of quantitative easing.ls

Elsewhere, the Swiss National Bank left its key rate at -0.75% while Turkey’s cut its by 200 basis points, keeping the global trend toward easier monetary policy intact. Brazil’s central bank had also cut its key rate on Wednesday and, surprisingly, left the door open for further easing.

3. Stocks set to open slightly higher

U.S. stock markets are set to open modestly higher, building on equally modest gains after Fed Chairman Jerome Powell’s press conference on Wednesday.

Dow futures were up 22 points or 0.1%, while S&P 500 futures and Nasdaq 100 futures were also up 0.1%. The yield on the 10-year U.S. Treasury bond edged up to 1.80%.

4. The Brexit election is here

The British head to the polls for a general election, and are expected to return the Conservative Party to power with a majority – according to spread-betting companies – of some 40 seats. That is at the lower end of Prime Minister Boris Johnson’s comfort zone.

The most recent polls have suggested the Tories hold a lead of 10 points over the left-wing Labour Party at a national level, but the U.K.’s ‘first-past-the-post’ electoral system means that the final result will depend on how a few dozen marginal constituencies vote.

Any majority, however small, will allow Johnson to pass his EU Withdrawal Bill immediately, formalizing the U.K.’s departure from the bloc. However, the smaller his majority, the easier it will be for hardline Brexiteers to derail subsequent negotiations on the U.K.’s trading relationship with the EU, which will have far-reaching long-term consequences for the U.K. economy and its markets.

5. IEA Warns of Oil Glut in H1 2020

The global oil market will stay oversupplied in the first half of next year despite the extra production cuts announced last week by the OPEC+ group, according to the International Energy Agency’s monthly report.

The global oil inventories will still swell by 700,000 barrels a day even if all the countries signing up to the cuts comply fully with their commitments.

U.S. crude prices were still higher, supported by the Federal Reserve’s perceived dovish outlook for the next year.

Saudi Crown Prince Mohammed bin Salman finally achieved his wish domestic funds pushed Saudi Aramco’s valuation up another 10% on its second day of trading, finally reaching the $2 trillion he always thought it was worth. In unrelated developments, Harold Hamm, the leading light of the U.S. shale industry, said he’ll step down as CEO of Continental Resources.

 Varchev Traders

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