Markets Back In Risk Averse Mode

Market Reviews

Risk aversion increases on the global markets, as selloff in the Turkish lira is intensifying. Global stocks were down. FTSE fell by 0.76%, DAX lost 0.74% and CAC dropped by 0.57%. Earlier today Nikkei rose slightly by 0.09%, Hong Kong HSI fell by 0.89%, China Shanghai SSE lost 1.14% and Singapore Strait Times dropped by 0.56%.

The euro weakened moderately against the US dollar on the background of data on Eurozone economic sentiment and the unemployment rate in Germany. Eurozone economic sentiment decreased to 111.6 in August, down from 112.1 and below expectation of 112.2 (the eighth straight month of deterioration). Industrial confidence dropped to 5.5, down from 5.8. Services confidence fell to 14.7, down from 15.3. Consumer confidence was finalized at -1.9.

The German consumer price index rose 2% last month, compared with the same month a year earlier, matching the previous month’s increase. Prices rose 0.1% from a month earlier. Economists had expected annual inflation to increase 2% and monthly inflation to rise 0.1%. Unemployment rate in Germany was at 5.2% in August, as in July (the lowest since January 1992).

US dollar remains strong. US economic data showed, that personal income rose 0.3% in July, spending rose 0.4%, matched forecasts. Headline PCE rose to 2.3% yoy, up from 2.2% yoy and beat expectation of 2.2%. PCE core grew to 2.0% yoy, up from 1.9% yoy and matched expectation of 2.0% yoy. Initial jobless claims grew by 3k to 213k in the week ended August 25, below expectation of 214k. Continuing claims fell by 20k to 1.708m in the week ended August 18.

Canada GDP rose 0.0% mom in June versus expectation of 0.2% mom. For Q2, GDP grew 2.9% annualized, slightly below expectation of 3.0%. Exports was the main driver to Q2’s growth, up 2.9%. Consumer spending growth also rose 0.6%.

Michel Barnier (EU chief Brexit negotiator) said that EU should be prepared for every outcome, and “that includes the no-deal scenario”. He also mentioned that the issue of Irish border was the “most sensitive point” of the negotiations.