4 factors impacting the market on Wednesday
The Dax performed an impressive turnaround after a report on Bloomberg said that Trump was prepared to push back the decision on imposing tariffs on EU auto imports for 6 months. This was music to the ears of German car makers which shot higher, boosting the Dax. The euro also advance on the news (and weak US retail sales), which briefly overshadowed signs of trouble brewing in Italy.
2. Italy heading for another showdown with EC?
Concerns of a renewed showdown between Italy and the European Union are unnerving investors. Italian bonds and stocks fell southwards a day after Italian Deputy Prime Minister Matteo Salvani stoked tensions by saying that he would be prepared to see the deficit rise above the EU’s limits if employment levels improved. His comments come after last year’s confrontation between Italy and the European Commission and as recent EC reports indicate that Italy’s deficit will exceed the 3% limit in 2020. The Italian deficit is a sensitive subject for euro and FTSE MIB traders. With European Parliamentary elections just around the corner, the overriding concern here is that a strong performance by populists in the European elections could embolden Salvani’s defiance further.
3. Wall Street reverses early losses from weak retail sales
Wall Street kicked off the session on the back foot following weaker than forecast retail sales data. Data showed that retail sales unexpectedly declined month on month in April. Sales fell -0.2%, against a 0.2% increase forecast. However, the market was quick to move past the disappointment as sentiment improved on trade deal optimism. Investors will continue watching trade talk headlines for clues as to where this is heading.
4. Pound tumbles As 4th Brexit Vote Set For June
The pound fell below $1.2900 to a three-month low on Wednesday as Brexit concerns intensified. As the worst performing currency among its peers, investors are quickly losing confidence over whether Brexit will get resolved. Theresa May is due to put her deal before Parliament for a fourth attempt at the beginning of June, however, the fall in the pound indicates that investors are unconvinced that she will push it through. With Labour saying that they won’t support the bill, the odds are looking slim at best of ministers approving Theresa May’s deal. Sterling dropped to resistance at $1.2860. Losses over the past 5 days have exceeded 1.2%.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024