Monday 15th October: Asian markets lower – Saudi tensions threaten crude

Narayan Joshi No Comments
Monday 15th October: Asian markets lower - Saudi tensions threaten crude 1

Global Markets:

  • Asian Stock Markets : Nikkei down 1.90%, Shanghai Composite down 0.97%, Hang Seng down 1.41%, ASX down 0.99%
  • Commodities : Gold at $1226.80 (+0.39%), Silver at $14.68 (+0.31%), Brent Oil at $81.33 (+1.12%), WTI Oil at $71.94 (+0.84%)
  • Rates : US 10-year yield at 3.150, UK 10-year yield at 1.636, Germany 10-year yield at 0.494

News & Data:

  • (USD) Prelim UoM Consumer Sentiment 99 vs 100.4 expected
  • (CNY) Trade Balance 213B vs 85B expected
  • Japan firms hopping on modern Silk Road railway under China's 'One Belt One Road'
  • Theresa May's domestic vulnerability leaves Brexit talks on knife-edge
  • Trump's unusual Fed bashing raises the stakes of a policy blunder that damages the economy

CFTC Positioning Data (Week Ending OCT 9th, 2018):

  • EUR short 16K vs -7K short last week.  Shorts increased by 9K
  • GBP short 61K vs 59K short last week. Shorts trimmed by 2K
  • JPY short 115K vs 114K short last week. Shorts increased 1K
  • CHF short 13K vs 13K short last week. No change in position.
  • CAD short 12k vs 19k short last week. Shorts trimmed by 7K
  • AUD short 73k vs 72k short last week. Shorts increased by 1K
  • NZD short 34K vs 31K short last week. Shorts increased by 3K

Markets Update:

Asian stock markets are mostly lower on Monday despite the positive cues from Wall Street Friday as investors treaded cautiously amid worries about global economic growth and on Saudi Arabia's rising diplomatic tensions with the West following the disappearance as well as suspected murder of Washington Post columnist Jamal Khashoggi. Crude oil prices also rose in Asian trading. Worries over Sino-U.S. trade disputes, a possible slowdown in the Chinese economy and higher U.S. borrowing costs tempered optimism despite a rebound in global equities late last week.

In the Greater China region, the Hang Seng index in Hong Kong fell by around 1.4 percent in the afternoon. The Shanghai composite also slipped by 1 percent while the Shenzhen composite lost its earlier gains to decline by 0.9 percent. The moves in China came as new reserve requirements for lenders went into effect, in a move by the People's Bank of China which is expected to inject 750 billion yuan (around $108.4 billion) into the banking system.

The Japanese market is declining as investors shrugged off the positive cues from Wall Street. Investors also digested news that Japanese Prime Minister Shinzo Abe is set to formally announce later today that the government will raise the consumption tax to 10 percent from the current 8 percent in October 2019. The Nikkei 225 shed close to 2% today – major exporters are mostly lower on a stronger safe-haven yen. SoftBank is falling more than 5 percent amid investors' worries about the company's strong ties to Saudi Arabia. In Australia, the benchmark ASX 200 fell 1 percent in afternoon trade as most sectors continued to trade down. The heavily weighted financial subindex fell 1.74 percent as major banking shares saw losses.

Oil prices reversed their downtrend since early this month. With Saudi Arabia’s threatening to use its oil as a weapon in light of the mounting pressure on them – the cushion to sanctions on Iran is no longer there – and analysts expect oil to touch $100 if the situation exacerbates. Although the U.S. 10-year yield posted its first major fall in about two months last week on stock market rout, the yield rose a tad on Monday to 3.15 percent.

The British pound shed 0.3 percent to $1.3114 after negotiators from the European Union and the UK failed to clinch a Brexit deal ahead of the crucial summit. The euro traded at $1.1552 (, down slightly after Chancellor Angela Merkel's Bavarian allies suffered their worst election result since 1950 on Sunday. On the other hand, the dollar is seen under pressure against the yen after U.S. Treasury Secretary Steven Mnuchin said on Saturday that Washington wants to include a provision to deter currency manipulation in future trade deals, including with Japan. That raised worried among Japanese policy circles that this would give Washington the right to label as currency manipulation any future foreign exchange market interventions by Tokyo to keep sharp yen rises in check.

Upcoming Events:

Monday, October 15, 2018

  • 01:30 PM GMT – (USD) Core Retail Sales m/m
  • 01:30 PM GMT – (USD) Retail Sales m/m
  • 03:30 PM GMT – (CAD) BOC Business Outlook Survey
  • Tentative – (USD) Treasury Currency Report
  • 10:45 PM GMT – (NZD) CPI q/q

Tuesday, October 16, 2018

  • 01:30 AM GMT – (AUD) Monetary Policy Meeting Minutes
  • 02:30 AM GMT – (CNY) CPI y/y
  • 09:30 AM GMT – (GBP) Average Earnings Index 3m/y
  • 09:30 AM GMT – (GBP) Unemployment Rate
  • 01:30 PM GMT – (CAD) Foreign Securities Purchases
  • 02:15 PM GMT – (GBP) MPC Member Cunliffe Speaks
  • 09:15 PM GMT – (USD) FOMC Member Daly Speaks
  • 10:20 PM GMT – (AUD) RBA Assist Gov Debelle Speaks

Wednesday, October 17, 2018

  • 09:30 AM GMT – (GBP) CPI y/y
  • 09:30 AM GMT – (GBP) PPI Input m/m
  • 09:30 AM GMT – (GBP) RPI y/y
  • 01:30 PM GMT – (CAD) Manufacturing Sales m/m
  • 01:30 PM GMT – (USD) Building Permits
  • 01:30 PM GMT – (USD) Housing Starts
  • 03:30 PM GMT – (USD) Crude Oil Inventories
  • 05:10 PM GMT – (USD) FOMC Member Brainard Speaks
  • 05:30 PM GMT – (EUR) German Buba President Weidmann Speaks
  • 06:00 PM GMT – (GBP) MPC Member Broadbent Speaks
  • 07:00 PM GMT – (USD) FOMC Meeting Minutes

Thursday, October 18, 2018

  • 01:30 AM GMT – (AUD) Employment Change
  • 01:30 AM GMT – (AUD) Unemployment Rate
  • Tentative – (JPY) BOJ Gov Kuroda Speaks
  • 09:30 AM GMT – (GBP) Retail Sales m/m
  • All Day GMT – (EUR) EU Economic Summit
  • 01:30 PM GMT – (USD) Philly Fed Manufacturing Index
  • 04:30 PM GMT – (USD) FOMC Member Quarles Speaks

Friday, October 19, 2018

  • 03:00 AM GMT – (CNY) GDP q/y
  • 03:00 AM GMT – (CNY) Fixed Asset Investment ytd/y
  • 03:00 AM GMT – (CNY) Industrial Production y/y
  • 03:00 AM GMT – (CNY) NBS Press Conference
  • 07:30 AM GMT – (JPY) BOJ Gov Kuroda Speaks
  • 09:30 AM GMT – (GBP) Public Sector Net Borrowing
  • 01:30 PM GMT – (CAD) CPI m/m
  • 01:30 PM GMT – (CAD) Core Retail Sales m/m
  • 01:30 PM GMT – (CAD) Common CPI y/y
  • 01:30 PM GMT – (CAD) Median CPI y/y
  • 01:30 PM GMT – (CAD) Retail Sales m/m
  • 01:30 PM GMT – (CAD) Trimmed CPI y/y
  • 04:30 PM GMT – (GBP) BOE Gov Carney Speaks
  • 05:00 PM GMT – (USD) FOMC Member Bostic Speaks