Market update: Investors love Huawei developments, make or break day for Boris, Unicredit draws a Deutsche

23 Jul

by Mihály Tatár


Good Morning!


  • Stock markets edged higher (SPX +0.28%, Nasdaq +0.71%, DAX +0.24%, Nikkei +1.22%, Hang Seng +0.11%) and the Dollar continued to strengthen (EURUSD 1.1190, USDHUF 290.70, USDPLN 3.7970), with the news that Trump made a deal with Congress on the debt ceiling  – no political circus on the budget this year – , and as investors speculated that the US will ease the ban on Huawei equipment, pushing up semiconductors stocks like Intel and Nvidia. (Note that since Huawei announced that it is not rolling out its own operating system – which would break Apple’s and Google’s duopoly on Android – the White House is quietly retreating on the Huawei issue, partly because it was only a way to pressure Beijing to begin with, and partly because neither US tech companies, neither European governments supported a technology cold war, fearing they would only lose. Very tellingly, Ericsson plunged 9% since it posted a healthy quarterly result but admitted it simply couldn’t secure additional business at the expense of Huawei.)  The British Pound nervously waited for the new UK leader to emerge today (GBPUSD 1.1255), whose welcome gift will be the oil tanker crisis with Iran. (It’s worth mentioning at this point that Foreign Minister Jeremy Hunt proposed a European plan to assemble a naval mission to provide safe passage through the Persian Gulf. This, of course, only shows the intellectual deficit at Westminster: First of all, the UK managed to shrink its navy from the 1982 Falkland war’s 80 warships to a mere 19 today, – and mind you, this is now the EU’s biggest naval force by far – meaning, without the US it is more something that has to be protected than it protecting anything. (But surely the money went into very important progressive projects.) Secondly, it is a very pitiful frame of mind when sea routes ’have to be protected’, normally, sea powers simply crush the source of piracy as in peacetime warships are not there to follow every single marchant ship. (This of course is politically unthinkable these days, and funnily, the UK has also been a strong supporter of the Iranian nuclear deal. There may be a compromise with Iran on the UK tanker shipping in the coming weeks – but the image of the UK as a world power will be gone.)  In the meantime, Unicredit draw a Deutsche Bank and announced a ’new strategic plan’ to cut 10,000 jobs and selling non-essential business (the stocks, so far, celebrated with a 4% drop, also similarly to Deutsche, as no amount of cost reduction offsets the shrinking potential of these banks), and in Hungary, traders waited for the MNB rate decision (nothing dramatic forecasted, EURHUF 325.30. Mind you, however, that the ’implicit tightening’ – the issuance of the ’Super Retail Government Bonds’ with their mouth-watering yields – was in itself a powerful tigthening, catapulting overnight Forint rates).



Have a nice day,



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