Market update: Stocks struggle at key levels, USD rises on more global slowdown signs

5 Mar

by Mihály Tatár


Good Morning!


  • The key levels blocked the rally, again (SPX -0.39% to 2792 points, Nasdaq -0.23%, DAX -0.08%, Nikkei -0.53%, Shanghai -0.30%), surprising commentators, as traders remained wary of a ’buy the rumour sell the news’ reaction. (This was actually foretold by commodities, which haven’t been advancing for a week now, WTI 56.30 and Brent 65.30 USD, Copper -0.04%). Investors also noted the latest developments of the global slowdown: The Canadian economy essentially stopped growing (0.1% Q/Q, 0.4% annualized in Q4 – the mainstream media’s favorite Prime Minister, Justin Trudeau bragged yet in 2017 that he has the fastest economy of the G7 in 2017, and his anti-energy policies now come back to haunt), Australia is dragged down (0.3% growth in Q4, composite PMI 49.1 – contraction) by the ’to be insignificant’ Chinese slowdown, and China itself admitted that it might be only advancing by 6% (instread of the 6.5% target, one has to wonder what’s the real growth rate now), while announcing a series of tax cuts including a 3% cut in VAT. And did I mention Trump announced he plans to end key trade preference for India and Turkey? No wonder the USD – the US being the only healthy major economy with real yields these days – had a strong day (EURUSD 1.1310 – traders are also wondering what Thursday’s ECB meeting will bring, you can bet it won’t be a victory report, GBPUSD 1.3160 – while UK ministers headed for Brussels for a final push on the ’phantastic’ Brexit deal, retail sales contracted and an anxious-for-its-car-industry Westminster announced the aim ’to build an industry-leading car-battery factory to push into electric vehicles’, spending, wait, 325 million Dollars. I guess all the ministerial staff in the UK and on the continent are reading the same Big Four presentations). The gradual strengthening of regional currencies was uninterrupted (EURHUF 315.70, EURPLN 4.298, EURCZK 25.63; EURRON 4.749 – Romania backtracked on the infamous ’greed tax’ on banks – which the market hated and for which S&P threatened to downgrade the country and moved its outlook to negative).


  • In the US, Democrats sighed with relief when Hillary Clinton announced she is not running to be president in 2020 (a bit strange – if it was only because of the Russian interference that she lost, shouldn’t it be very easy for her to win now? Just kidding). That said, even left-leaning media journalists warn that the number of contenders is not healthy – with pro-cannabis John Hickenlooper joining the race yesterday there are now 14 Democrat contenders, with many more on the potentially running list (from former vice president Joe Biden to New York billionare businessman Michael Bloomberg). In my strictly personal observation, neither of them seems to understand Trump’s victory and the loyalty of his base, and they seem to think the problem with Hillary was that she wasn’t left enough. (Bill Clinton would look like a conservative here. Remember the most apocalyptic line in Trump’s CPAC speech: ’Vote for me, because nobody else can protect you from what is coming’.) In the meantime, while the India – Pakistan tensions barely dropped – as expected here -, and India announced a series of weapon deals with Russia (from nuclear submarines to Kalashnikovs, these were of course already under negotiation last year), geopolitical strategists warned that despite its size, the army of India is in a bad shape: 68% of the equipment is so old its considered ’vintage’ (the air duel between an Indian Mig-21 and a Pakistani F-16 was a case in point), and in a case of war, ammunition supply would run out in 10 days. Given that some want India in the role of ’balancing’ the rising China, India will now probably join the Asian arms race.



Have a nice day,



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