Equities jump after G20 summit, OPEC to extend output cut agreement

Summary:
- US-China trade truce boosts moods on the equity markets
- OPEC to extend output cut agreement by 9 months
- TRY gains on sanction relief rumours
- Bitcoin flirts with $10k mark
- EU top jobs talks suspended until tomorrow
- Survey data shows further weakness in the global economy

Moods on the first day of a new week are upbeat to say the least. Trade truce struck over the weekend between Donald Trump and Xi Jinping increased appetite for riskier assets, especially equities. In turn, we observed strong gains during the Asian trading hours and solid performance of the European stocks later on. Major indices from Wall Street also launched today’s session in green being fuelled by solid performance of the tech sector, especially chip makers. Semiconductor stocks are on the rise thanks to Trump stepping back on Huawei.

Moving onto the FX market, we can spot that the USD is the strongest currency from the G10 basket today. The greenback is being propped by better-than-expected manufacturing ISM reading. Nevertheless, the index declined in June to the lowest level since the third quarter of 2016. In spite of an expected pick-up to 49.5 pts, the UK manufacturing PMI for June dropped from 49.4 pts to 48 pts and exerted some pressure on the British currency. The Turkish lira is the best performing EM currency today. TRY benefits from rumours that the US President, Donald Trump, may take a softer stance in relation to sanctions on Turkey.

When it comes to the commodity markets, two main themes dominated today - OPEC meeting and decline on the precious metals market. OPEC is widely expected to extend the output cut agreement over the next 9 months. Such a move was signalled over the weekend by Russia and Saudi Arabia. Gold is trading lower thanks to de-escalation of the US-China trade conflict and strengthening of the US dollar.

When comes to the European politics, no breakthrough occurred on Monday. Leaders of the EU member countries still struggle to name candidates for the top EU jobs - the talks were suspended until tomorrow. Candidates to succeed May as the UK Prime Minister - Johnson and Hunt - try their best to win appeal of party members. The latter announced that in case he is elected to be the next Prime Minister he would decide by the end of September whether striking a deal with the EU is “realistic”. In case it is not, Hunt said he will cease negotiations with the bloc and prepare the country for a no-deal exit.

Pullback on the cryptocurrency market continues. Capitalization of the whole market is back below $300 billion while Bitcoin price hovers close to the $10k handle. The most famous digital currency is trading over 20% below its recent peak.