Daily Market Update 30th June 2016
OVERNIGHT NEWS
- BREXIT:
- A motion of no confidence in Labour Party leader Jeremy Corbyn has been passed by the party’s MPs (172 against 40), with a challenge to his leadership looking to be imminent. However, and Mr Corbyn has refused to step down. This follows a slew of resignations from the Shadow Cabinet on Sunday
- EU27 leaders reiterated that there would be no negotiations before notification to the EU (Article 50) and indicated that freedom of movement is necessary to access the single market, rejecting preferential treatment for the UK
- US:
- PCE Core deflator came in as expected at 0.2% MoM and 1.6% YoY and Personal Spending increased 0.4% as expected which confirms that the economic growth is bouncing back strongly this quarter and that consumers may be capable of driving the rebound over the near to medium term
FOREIGN EXCHANGE (INDICATIVE RATES)
| Currency | Last | % Change | Overnight Range |
|---|---|---|---|
| DXY | 95.77 | -0.43% | 95.592 – 96.7164 |
| EURUSD | 1.1126 | 0.62% | 1.1052 – 1.113 |
| USDJPY | 102.83 | 0.67% | 102.18 - 103.02 |
| AUDUSD | 0.7446 | 0.74% | 0.7383 – 0.7457 |
| GBPUSD | 1.3234 | -1.25% | 1.3291 - 1.3534 |
(Source: FabTrader)
Commodities (INDICATIVE RATES)
| Currency | Price USD | % Change | Overnight Range |
|---|---|---|---|
| Gold | 1325.18 | 0.53% | 1317.67 - 1333.88 |
| Silver | 17.76 | 0.75% | 17.6355 - 17.8842 |
| Oil (BRENT) | 47.16 | 2.33% | 46.83 – 49.24 |
| Oil (WTI) | 46.70 | 1.08% | 45.83 – 47.96 |
(Source: Bloomberg and Saxo)
COMMODITIES
Precious Metals: Silver continues to surge higher and closed at its year high at 18.3. 18 dollar was a key resistance turned support level that was tested in May. Gold remains well supported above the support level at 1300
Oil: Crude stockpiles dropped 4.05 million barrels last week, the 6th straight decline and output fell a 3rd week to the lowest. WTI fell as much as 61cents to 49.27 before it settles at 49.88, the highest since June 23.
FOREX NEWS
The Risk On continued overnight with no new news following the Brexit vote, the market is differentiating more and more the global risks
The US rates higher and the rally in equities triggered good buying interest in USDJPY and was positive for risk assets. The main resistance for USDJPY is at 103.50. The DXY was down 0.43%
GBPUSD continued to rally overnight reaching again 1.3500. Technically, the major resistance is still far away at 1.4000.
The big beneficiaries of the risk on were the EM currencies with COP, ZAR and BRL up more than 2%. In Asia, all the currencies rallied to pre-Brexit levels: USDMYR 1M NDF trading at 4.0125. USDKRW moved from 1187 to 1155 in the 1M and USDSGD is again below 1.3500
World stocks poised for worst month since January
Global stocks were set for their worst monthly performance since January, with renewed concerns over global growth forcing European shares and oil prices onto the back foot again following two positive sessions.
The MSCI All-Country World index .MIWD00000PUS was little changed on the day, but is set to end the month down 2.5 percent, its worst month since a troubled start to the year.
Worries that a weaker Chinese yuan could spark deflation, seen as a key reason for the worst beginning to the year for global stocks, were reignited after Reuters reported that China's central bank was willing to let the currency fall further.
"Since the beginning of the year investors have faced a series of macro changes to the investment landscape," said Sean Darby, chief global equity strategist at Jefferies, adding that Britain's decision to leave the European Union last week was only the most recent shock to investor confidence.
The two-day selloff in the aftermath of last week's vote wiped more than $3 trillion off the value of global stocks.
"No doubt global growth will take a short term hit, but it is not going to result in a credit crisis," said Darby.
Bond markets see Brexit as another significant blow to the world economy with German and Japanese benchmark 10-year government debt yields both falling to historic lows below zero over the past week.
On stock markets, European shares were flat, while the FTSE 100 .FTSE was off 0.1 percent in early trading with financials the biggest drag on both indexes.
Shares of UK and European banks .SX7P, a center of concern since Britain shocked global financial markets on Friday, have been the hardest hit during the recent sell-off and are the worst performing sectors this year in their respective markets.
In currencies, sterling GBP=D4 was up 0.2 percent, putting distance between a 31-year trough of $1.3122 touched on Monday. It has still lost more than 6 percent in the quarter.
The euro, another casualty in the days after Brexit, fetched$1.1111 after reaching $1.0912 on Friday, its lowest since March.
Crude oil prices retraced some of their gains from Wednesday's sharp rally as fears over strike outages in Norway abated.
Brent crude LCOc1 fell 0.9 percent at $50.10 a barrel after jumping more than 4 percent overnight, thanks to a larger-than-expected drawdown in U.S. crude inventories. [O/R]
Oil has mostly recovered what it lost after the Brexit shock. For the quarter, Brent has risen 26 percent on hopes that declining production in some countries would ease a global glut. (Source: reuters.com)
