Varchev Finance: Trading day in one post – 20.06.2018

Asian stock market: Asian stocks were mixed on Wednesday, with several regional markets looking to stem sharp losses made in the previous session that were caused by elevated fears of a trade war between the U.S. and China. Markets in South Korea shrugged off trade-related concerns to edge up, with the Kospi rising 0.59 percent. In Australia, the S&P/ASX 200 advanced 0.66 percent, with most of its subindexes trading in positive territory. Financials, a heavily weighted sector, rose 1.31 percent as oil producers also notched gains. Japan’s Nikkei 225 gave up early gains to slip 0.19 percent as the financials and materials sectors traded lower. Losses were led by the shippers and steelmakers in the morning, with the Topix sea transport subindex down 2.96 percent. Banking stocks were down 1.67 percent. The Hang Seng Index tacked on 0.34 percent.


FX market: The rise of the yen from previous days may be just the tip of the iceberg, especially if a new recession hit the global economy. Former Finance Minister Lawrence Summers warned that developed countries are badly prepared against a new downturn. As well as a traditional safe haven asset, the yen will benefit because the Bank of Japan is yet to join the Fed and ECB on the road to normalizing monetary policy. This means that the US and Europe will have more ammunition to revive the stimulus in the battle with the recession, which will further weaken their currencies.


Commodities market: Oil’s volatility has climbed to its highest levels since February. The main reason for this is the meeting of OPEC, which will be held at the end of this week – Thursday and Friday in Vienna. The question that concerns all market participants is whether group members will maintain production restrictions that have raised black metal prices to $ 70 a barrel or there will be a change in the agreement that reduces daily production by 1.8 million barrels from the market for the past 18 months. Russia is pushing to return a million barrels a day to the markets. Saudi Arabia will most likely try to reduce the number to prevent prices from falling too much. But, not all OPEC members agree. Iran, Venezuela and Iraq are of the opinion that the current agreement is good and should be maintained. Gold prices lost more than 4% on Friday, as traders expect an increase in global supply.


European stock market: Today, traders are awaiting Mario Draghi’s statement, and his latest two views have not gone far beyond the previous ones, basically confirming the notion that the central bank is aiming for an increase in the interest rate in the third quarter of this year. The main European indices are expected to start the session around their closing levels, which usually signals caution. There are no key economic reports during the day, so moods will be determined by central bankers and rumors about the US-China trade relationship.


U.S. stock market: Shares plunged into a negative territory after another Donald Trump’s threat to China, which increased the fears of the upcoming trade war between the two largest economies in the world. “It will be good to ask how many times the shares will continue to react to the same news, all this may be a fine strategy for a good deal in the future,” said Willie Delwiche, investment strategist at Baird. With the high optimism of investors, there is not much room for error and there is a real risk that all this will start to ruin the consumer and business confidence.


Economic calendar for the European and U.S. trading sessions:
09:00 Germany – PPI
13:30 Europe – ECB’s Coeure Speaks
16:30 USA – Fed’s Chair Powell Speaks
16:30 Australia – RBA Gov. Lowe Speaks
16:30 Japan – BoJ Gov Kuroda Speaks
16:30 Europe – ECB President Mario Draghi Speaks
17:00 USA – Existing Home Sales
17:30 USA – Crude Oil Inventories

 Trader Aleksandar Kumanov

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