Macro Afternoon

Share markets in Asia are losing their optimism midweek as traders prepare for the non farm payrolls on Friday with the background of flailing manufacturing and a lower energy prices not helping risk appetites.

The Shanghai Composite has fallen over 1% to just above the 3000 point barrier, barely holding on to its previous bounce-back. The Hang Seng Index has slipped 0.3% to 28781 points, unable to make good on the previous daily high as expected, but still holding on above the breakout area at 28500:

Japanese share markets fell as the Yen firmed again throughout today’s session, with the Nikkei 225 closing 0.6% lower to 21638 points, now with three sessions in a row with no new highs.  The USJDPY pair has bottomed out in recent hours to the 107.60 level, below trailing ATR support on the four hourly chart and looking set to breakdown even further tonight:

The ASX200 was the standout by rallying nearly 0.5% higher to 6685 points with banks continuing their post-RBA retracement while industrials and property giants lifted the rest of the market.  The Australian dollar has stalled today at below the 70 handle and while momentum remains positive following the RBA rate cut, we could be seeing the first signs of a rollover:

S&P and Eurostoxx futures are stagnant with traders considering the appointment of Christine Lagarde as the next ECB president as bond prices rally. The four hourly chart of the S&P500 shows a small line of resistance at the 2980 point level that needs to be cleared soon to keep this party moving ever higher:

The economic calendar has a slew of manufacturing and services PMI’s across Europe and the US to absorb tonight.

Comments

    • … CHINA …

      Li Keqiang, Chinese Premier, Reaches Out to Trump and Business – The New York Times

      https://www.nytimes.com/2019/07/02/business/china-li-keqiang-economy-trade.html

      DALIAN, China — A top Chinese leader made an unusually public effort on Tuesday to ease trade tensions somewhat with the United States, woo foreign investors and reassure his own country’s citizens that their economy remained on track.

      In meetings during the World Economic Forum in the Chinese port city of Dalian, Premier Li Keqiang, China’s No. 2 official, promised to cut tariffs, loosen limits on foreign investment, protect intellectual property and allow foreign companies to apply for China’s generous subsidies for research and development. He made many of those comments in a rare question-and-answer session in the afternoon with executives from Japan, the United States and other countries.

      He also said that China would allow foreign financial services companies into its market a year earlier than previously promised, and that it would rewrite many rules on foreign investment.

      “We will move up the lifting of foreign capital limits in securities, futures and life insurance, from 2021 to 2020,” Mr. Li said in a morning speech, prompting a burst of applause from a crowd that appeared to include many bankers and others in finance. “This shows China’s commitment to opening up.” … read more via hyperlink above …

  1. … NEW ZEALAND … Since when did the Banks give a toss about the wider public good ? …

    Finance Minister Grant Robertson pleads for ‘mature debate’ amid war over bank capital … Hamish Rutherford … Stuff NZ

    https://www.stuff.co.nz/business/113967102/finance-minister-grant-robertson-pleads-for-mature-debate-amid-war-over-bank-capital

    Finance Minister Grant Robertson has urged the financial sector and regulators “to listen to each other” amid a fight over a plan to improve bank safety.

    Amid claims that the plan would shrink the economy and may cause major institutions to pull back from New Zealand, Robertson issued a statement which appears to be an attempt to prompt discussions between the banks and the independent central bank.

    The Wellington-headquartered Reserve Bank has proposed requiring banks to hold significantly more capital on their balance sheets, which would mean the New Zealand incorporated banks would have to hold around another $20 billion in capital. … read more via hyperlink above …

    • … Kiwis are not much interested in Mickey Mouse property deals…

      … Is the Government learning anything with its nonsense Kiwibuild scheme ? …

      Harbourside apartment in Auckland’s Central Business District sells for $20,000, but there was a catch or two … Greg Ninness … Interest Co NZ

      https://www.interest.co.nz/property/100527/harbourside-apartment-aucklands-cbd-sells-20000-there-was-catch-or-two

      A waterfront apartment in downtown Auckland has sold at auction for $20,000 (yes, that’s not a typo – twenty thousand dollars!)

      The one bedroom plus study apartment comes with a car park included in the price, and also a spacious deck. It’s north facing with uninterrupted views across the harbour to the North Shore (see photos above and below).

      It’s located on the harbour side of the Scene 1 Building at 2 Beach Road in the CBD, just along from the intersection with the bottom of Beach Road.

      According to QV.co.nz it had been purchased for $311,200 in 2002. … read more via hyperlink above …

  2. Negative Interest Rates Benefit the Global Economy, Says IMF Chief Christine Lagarde

    https://www.wsj.com/articles/negative-interest-rates-benefit-global-economy-says-imf-chief-lagarde-1459848698

    “…FRANKFURT—Subzero interest rates in Europe and Japan are “net positives” for the global economy, International Monetary Fund chief Christine Lagarde said Tuesday, though she warned that the side effects of unorthodox central-bank policies should be closely monitored…”

    If you were wondering whether the clowns running the joint have learnt anything at all the answer is no.

    Closely monitored?

    For what?

    Blossoms amidst the poop?

  3. Be interesting to see what property prices do now. I would laugh if these cuts did not do much although I’m usually wrong, people at work are wondering what is going on all of a sudden and are worried about their job while my mate just lost his job right after buying a 700k IP using equity only, hasn’t even settled yet. I think a lot of this boom was the Chinese bid, I hope they throw everything at this now and fast, then when we really need the stimulus there will be nada left. Then what? Interesting times I hope it happens under scumo as a gift

  4. Mining BoganMEMBER

    My trip to the Lord’s Ashes test now relies on the Kiwis winning tonight and that nice Williamson boy scoring 23 more runs than Joe Root.

    Of course there are other considerations but one game at a time as they’re taught to say in media training.

    • C.M.BurnsMEMBER

      on the flip side, it means that if england win and Australian beat the saffers (not guaranteed but imminently doable), we get to play NZ in the semi and england and india have to duke it out in the other SF

      • Heading to 50c chicken wing night on the first date. And getting them to pay for theirs.
        (Though, a few of us have always jested that 50c chicken wing night is the ultimate first date. If it fails, you got 50c chicken wings. If they wish to see you again after you’ve made a mess that would embarrass a two year old then you could be onto something very special indeed.)

      • The Traveling Wilbur

        And you can get a decent head if you’re lucky and the chicken’s any good.

        All the ex-KFC employees raise the roof please.

      • haroldusMEMBER

        When I met my missus, I knew she was a keeper.

        It was the gloves that gave it away.

      • C.M.BurnsMEMBER

        the gloves and the ‘no questions asked policy’, otherwise known as ‘what happens in the cold room of a kfc stays in the cold room’

      • The Traveling Wilbur

        Without revealing any secrets – being in the cold room at a KFC does make your nipples hard. Just ‘sayin.

    • The Traveling Wilbur

      I see your account is being spoofed again. 😉

      Ans: Der. What usually happens after a rate cut. Up up and away.

    • The Traveling Wilbur

      Equally seriously, the DXY has finally been picking up a little of late and that seems to have stopped recently.

      But back to the RBA and it’s magic… it cut TWICE in 30 days and the AUD is still where it was a month ago. Within 10 pips of the close this time last month.

      Australia. Winning.

      Buy property. Buy bonds and shares. Forget value(s). And ethics.

      • So where were you when Friedman was spewing a dawgs breakfast an all were eating it up ….

  5. Hey look, this is what making stuff looks like…
    youtube.com/watch?v=H1WXlHONorw
    Wouldn’t know it in Straya but..

  6. How good are these car sales? And why aren’t vibrants buying up?

    https://outline.com/TdU2Jv: The new indicator that tells us something is deeply wrong with the economy

    According to the Federal Chamber of Automative Industries, there were 117,817 vehicles sold across the nation in June. It was a 9.6 per cent drop on the same month last year. They were down by 10.7 per cent in NSW and 11.2 per cent in Queensland, while in Victoria they were off by 7.6 per cent. In perhaps the sickest economy in the country – the Northern Territory – sales were down by 31.4 per cent. So far this year, Australians have bought 554,466 cars. It’s the worst opening 6 months of a year since 2012.

    • The Traveling Wilbur

      Equity mate. People are just saving up their deposits for their next IP. Cyclical you see.