Summary:
- Confusing trade war headlines rattled equity markets
- FOMC minutes showed most officials saw still significant risks to the economic outlook
- Equities trade lower, still room to head lower once trade deal hopes fade away
Asian equity markets dropped on Thursday in response to a bunch of confusing headlines regarding the US-China trade spat. A report from Reuters released Thursday afternoon was a trigger as it suggested no deal agreement could be made until the end of the year. In turn, a bit earlier Bloomberg reported that trade negotiations are in a sensitive stage and could easily fall apart. Overnight, Donald Trump reiterated once again that China wants a trade deal more than he does, it can be treated as a clear indication that no everything is going smoothly. Moreover, Bloomberg reported on Wednesday that Chinese President Xi’s last foreign visit this year was planned to Brazil, suggesting that any trade deal signing ceremony is unlikely to take place outside China this year unless Liu He is empowered to sign a deal on behalf of Xi Jinping. Last but not least, Chinese Vice Premier Liu He said overnight that he is “cautiously optimistic” about reaching a trade deal with the US.
Although the above-mentioned information clearly pushed stocks lower, one cannot forget about FOMC minutes released yesterday from the October’s meeting. The account suggested that most officials saw elevated and significant risks to the economic outlook, thereby justifying another rate cut then. Moreover, most participants judged policy would be well calibrated after the rate cut last month and “likely would remain so as long as incoming information about the economy did not result in a material reassessment of the economic outlook.” In practice, it means the Fed is done with cuts so far and this notion is shared by a majority of the FOMC.
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile appUS100 drew the sinister pattern at the daily chart on Wednesday. Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.