Summary:
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US stocks bounce from 3-week lows
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USD gains after Trump-Ukraine manuscript released
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GBP pulls back as UK parliament returns
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Oil fills Saudi attack gap (inventories rise)
It’s been a busy day of news developments with several major themes having a clear market impact. At the time of writing some more fanciful remarks from Trump have given indices a lift with the US turning green after the president said that a trade deal with China could happen sooner than you think.
The S&P500 had earlier dipped to its lowest level in around 3 weeks after a manuscript of the Trump-Zelenskiy phone conversation was released. Key points from the note were:
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Trump asked Zelenskiy to examine whether Democrats' Biden stopped the investigation of a company in which is son was involved
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Trump: “If you can look in it… it sounds horrible to me”
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Trump also asked the Ukranian president to investigate whether his country could locate a hacked Democratic National Committee computer server that became an issue in Trump’s 2016 campaign
While this news made headlines there’s nothing too groundbreaking here and it’s also worth keeping in mind that this is Trump’s own words. In fact the initial weakness in indices marked the low of the day (at the time of writing) while a clear rise in US yields since has supported the greenback. The EURUSD has dropped back lower since with the market trading at 1.0955 on the European close.
There’s been some selling seen in sterling as the UK parliament returns, with the pound drifting lower against all its major peers. There’s not really any negative news to support this pullback, with Jeremy Corbyn remaining coy on the timing of his no-confidence motion probably a shrewd move as he is not falling into a possible trap and risking opening the door to a no-deal exit once more. Rather, the weakness can likely be attributed to a retracement after what has been a strong push higher and perhaps traders are getting just a little bit cautious on the pound as we await the next move from the PM. In the same way that the decision to prorogue effectively sped up the response by the opposition, the return of parliament could move things forward more quickly and with the government’s next move far from certain some paring of the recent gains in the pound is not too surprising.
The weekly crude oil inventory release has, on the face of it at least, done little to help the plight of the Oil price with an unexpected build announced when the market was near its lowest levels of the day. The components of the release were as follows:
Crude Oil inventories: +2.4M vs -0.6M exp. Prior +1.1M. API: +1.4M
Gasoline: +0.5M vs -0.6M exp
Distillates: -3.0M vs -0.4M exp
Production: +12.5M (+100k on prior)
Since then however, there has been a bit of a bounce with the lows of 60.29 occurring just a couple of cents from closing the gap from where price spiked over the weekend after the Saudi attacks.
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