TradeTheNews.com Weekly
Market Update: North Korea and Mother Nature Menace Market Sentiment
Fri, 08 Sep 2017 16:04 PM EST
Many investors returned from summer breaks to find a host of issues weighing
upon the market. The holiday-shortened week began with traders aggressively
paring back risk in light of the escalating tensions in North Korea surrounding
its latest nuclear test. With the post-hurricane recovery in Texas still just
getting underway, the potentially catastrophic hurricane Irma barreled towards
Florida. Economists began to downgrade Q3 growth forecasts, believing near term
business activity and productivity will surely be depressed by these two
historic storms, though the Fed's Dudley noted that hurricane effects are
transitory and likely to reverse by early 2018 as reconstruction gets underway.
Treasury markets surged, pushing yields to the lowest levels of the year, while
the US Dollar slumped to the lowest levels since early 2015. Stock prices
recovered from Monday’s lows on surprise word that President Trump cut a deal
with the Democrats to keep the government open, fund hurricane recovery
efforts, and raise the debt ceiling. The Euro moved to a new high above 1.2070
after the ECB left rates and QE unchanged on Thursday. ECB President Draghi did
not alter expectations, indicating the central bank would likely unveil its
plans on exiting the asset purchase program in October. The Chinese Yuan surged
to the highs of the year, testing the 200-week moving average, sparking
speculation officials in Beijing were stepping in and attempting to stabilize
the currency at these levels. By Friday, investors' jitteriness was only
exacerbated by disclosure of an enormous data breach at credit giant Equifax,
and solidifying forecasts for a direct hit in South Florida with a path that
will take Irma straight up the spine of the entire state. Gold prices drifted
higher, ending the week at levels not seen since right after the November
election. Oil prices recovered some of last week’s losses related to Harvey,
while gasoline prices retreated. For the week, the DJIA lost 0.9%, the
S&P500 dipped 0.6%, and the Nasdaq fell 1.2%.
In corporate news this week, insurance stocks, notably Aspen Insurance Holdings
and Everest Re, were hit as the clean-up in Texas from Hurricane Harvey
continued and Irma ravaged the Caribbean, threatening a weekend landing in
south Florida. A swath of regulators and politicians announced plans to probe
the causes of and reaction to Equifax’s massive data breach that may have
affected up to 143 million American consumers. And United Technologies
announced plans to acquire manufacturer Rockwell Collins for $140/share in a
$30B cash and stock deal, one of the biggest mergers in aerospace industry
history.
MONDAY 9/4
(UK) PM May set to approve a politically explosive Brexit bill of up to £50B
after the Conservative Party conference in October - financial press
*(EU) EURO ZONE SEPT SENTIX INVESTOR CONFIDENCE: 28.2 V 27.0E
TUESDAY 9/5
*(AU) RESERVE BANK OF AUSTRALIA (RBA) LEAVES CASH RATE TARGET UNCHANGED AT
1.50%; AS EXPECTED
*(UK) AUG SERVICES PMI: 53.2 V 53.5E (13th month of expansion)
WEDNESDAY 9/6
(PL) POLAND CENTRAL BANK (NBP) LEAVES BASE RATE UNCHANGED AT 1.50%; AS EXPECTED
*(US) JULY TRADE BALANCE: -$43.7B V -$44.7BE
(US) AUG FINAL MARKIT SERVICES PMI: 56.0 V 56.9E
(US) Fed Vice Chair Fischer to step down on or around Oct 13th, cites personal
reasons - letter to President Trump
(US) Democrats say President Trump and Congressional leaders have agreed to
pass Harvey aid along with a short term debt limit and govt funding bill -
press
(US) Reportedly Pres Trump is unlikely to nominate Gary Cohn as next Fed
Chairman - financial press
(BR) BRAZIL CENTRAL BANK (BCB) CUTS SELIC TARGET RATE BY 100BPS TO 8.25%; AS
EXPECTED
USD/CNY *(CN) PBOC SETS YUAN REFERENCE RATE AT: 6.5269 V 6.5311 PRIOR (9th
consecutive stronger setting, longest run since 2011)
(AU) AUSTRALIA JULY TRADE BALANCE (A$): 460M V 1.0BE
THURSDAY 9/7
*(SE) SWEDEN CENTRAL BANK (RIKSBANK) LEAVES REPO RATE UNCHANGED AT -0.50%;
maintains Repo Rate Path (as expected)
*(CN) CHINA AUG FOREIGN RESERVES: $3.0915 V $3.095TE (7th month of increase)
(EU) EURO ZONE Q2 FINAL GDP Q/Q: 0.6% V 0.6%E; Y/Y: 2.3% V 2.2%E&NBSP
FAST Reports Aug Net Rev $411.5M +12.8% y/y
(EU) ECB LEAVES MAIN 7-DAY REFINANCE RATE UNCHANGED AT 0.00%; AS EXPECTED
*(US) Q2 FINAL NONFARM PRODUCTIVITY: 1.5% V 1.3%E; UNIT LABOR COSTS: 0.2% V
0.3%E
(EU) ECB Chief Draghi: Reiterates that interest rates to remain present level
well past end of QE; medium term outlook broadly for both growth and inflation
(EU) ECB Chief Draghi: Meeting did discuss growth, inflation and exchange rate
- Q&A
AAPL New iPhone reportedly experienced some production problems earlier this
summer; could affect supply chain and may delay shipping - press
EFX Announces cybersecurity incident involving consumer information; potentially
impacts 143M US consumers; credit card numbers for 209K consumers were accessed
(JP) JAPAN Q2 FINAL GDP SA Q/Q: 0.6% V 0.7%E; ANNUALIZED: 2.5% V 2.9%E
(CN) CHINA AUG TRADE BALANCE (CNY): 286.5B V 335.7BE
(CN) CHINA AUG TRADE BALANCE: $42.0B V $48.5BE
FRIDAY 9/8
(FR) FRANCE JULY INDUSTRIAL PRODUCTION M/M: 0.5% V 0.5%E; Y/Y: 3.7% V 3.6%E
*(UK) JULY INDUSTRIAL PRODUCTION M/M: 0.2% V 0.2%E; Y/Y: 0.4% V 0.4%E
(CA) CANADA AUG NET CHANGE IN EMPLOYMENT: +22.2K V +15.0KE; UNEMPLOYMENT RATE:
6.2% V 6.3%E
(US) Fed's Dudley (dove, FOMC voter): hurricanes push down economic activity,
but those effects are transitory; longer term effect is actually an economic
positive on the rebuilding activity
(US) New York Fed Nowcast: cuts Q3 GDP forecast to 2.1% from 2.2% on 9/1; sees
Q4 GDP forecast at 2.6%
TGT Lowering prices on thousands of items - corporate blog
(US) Atlanta Fed raises Q3 GDP to 3.0% from 2.9% on 9/6
