Australian Shares

8

MS: Global economy slowing fast

Via Morgan Stanley today As regular readers know, Morgan Stanley is pretty bearish on global risk assets. This applies to emerging markets (EM) too, where we’ve been calling for wider credit spreads, weaker EM currencies, particularly in Asia, and lower equity prices. However, not so long ago the narrative guiding investors ran something like this: The

2

Macro Morning

By Chris Becker  No news means good news for risk markets with Wall Street rallying on Friday night, with currency markets stabilising although Pound Sterling got a bit excited on more hard line Brexit gyrations. The USD remains steady while safe havens like Yen and gold are also largely unchanged with only Euro dropping on

56

Macro Afternoon

Some stability has returned to risk markets as bond yields rise slightly while the USD firms against commodity proxies and the Yuan proper.  Going into the European session, Euro is selling off already while gold has retraced from its recent record high. The Shanghai Composite has continued its little rebound to finish 0.3% or so higher to

0

Macro Morning

By Chris Becker  Risk markets remain teetering on the edge overnight with US stocks treading water, buoyed by a better than expected retail sales print, as traders work out what to do in the face of global recession fears. More stimulus from the ECB in September sent bond yields further into negative territory while the

111

Macro Afternoon

A bath of blood on Australian share markets with the rest of the region escaping most of the volatility today, following big falls on Wall Street overnight. Gold remains bid while the Australian dollar was largely unchanged after the latest unemployment print. Concerns over yield curve inversion continue with the Australian 10 year yield down

12

Blackmores China bubble bursts

From BKL: I know nothing about this stock but I know a bad chart when I see one. Critical support just gave way: Funny, emerging Asian middle class demand still seems a good growth story and it’s not expensive at 19x. Still, today it appears ex-growth and is being punished for it.

3

Global fundies go all-in on deflation

Via BofAML: The BofAML August Global Fund Manager Survey The nut: August BofAML FMS most bullish on rates since 2008 as trade war concerns send recession risk to 8-year high; investors slash exposure to cyclicals to buy US Treasuries & US growth stocks; with global policy stimuli at a 2.5-year low, onus is on Fed/ECB/PBoC

1

Macro Morning

By Chris Becker  The dead cat is quite dead, its not resting. Wall Street caved in overnight, falling 3% as no news meant bad news as everyone saw through Trump’s tariff trick as just that, with macroeconomic realisations unfolding instead. It was a race to safe havens again, with Yen and gold rising, while Euro tumbled

46

Macro Afternoon

Markets are in a much better mood as the Christmas tariff surprise by Trump is alleviating shorter term concerns over the US/China trade war. Tonight however, the focus will be on Europe as the latest GDP print for the EZ will follow last night’s dreadful German ZEW Survey. In Asia today, the slump in Chinese

0

Macro Morning

By Chris Becker  A reduction in US tariffs and timeline was behind a rebound on Wall Street and the USD overnight with concerns over the growing trade war with China overshadowing a stronger than expected CPI print for July. The German ZEW Survey slumped but was ignored by European equities as the Euro fell on

153

Macro Afternoon

Markets are in a mixed mood as we head into the European session as Brexit, Itali-exit and Tianneman Square Part Deux demonstrations put a damper on risk appetite, with most stock markets off while the USD remains firm against most of the majors. The Shanghai Composite has given up after its initial good start to the week yesterday,

2

Macro Morning

By Chris Becker  Trade war concerns are still weighing down on risk sentiment across global markets with Wall Street falling over 1% to start the trading week on a bad note, as everyone watches dead cat bounces develop on their charts. The unrest in Hong Kong plus the chance of new snap elections in Italy

99

Macro Afternoon

A much better than expected start to the trading week here in Asia with the PBOC keeping the Yuan very weak, still well above the 7 handle against USD, with most stock markets putting in light rises or scratch sessions. The Shanghai Composite has finally found some momentum, jumping over 1.2% to 2808 points while the Hang Seng

3

Macro Morning

By Chris Becker  Friday night saw the return of the short sellers and the end of what looked like a sustainable bounceback in equity markets. Wall Street closed sharply lower as the prospect of more fracas from the US-China trade war emerged, as the PBOC continues to wipe out the Yuan while Trump targets the Fed

148

Macro Afternoon

A mixed day to end the trading week here in Asia with the PBOC keeping the Yuan nice and weak, still well above the 7 handle against USD, with most stock markets putting in scratch sessions. Meanwhile, the Shanghai Composite has been unable to gain any momentum, slumping and down over 0.4% since the return of the

0

Macro Morning

By Chris Becker  The short sellers are getting wiped out as stability turns into dip buying overnight on Wall Street and in Europe rebounding solidly. US Treasuries fell slightly but yields remain super low while commodity markets firmed slightly on the better risk sentiment, with the Australian dollar coming back before selling off later in the

60

Macro Afternoon

A much better day here in Asia as Yuan stabilises and risk sentiment improves from overnight markets. The commodity proxy currencys – Aussie and Kiwi – are in recovery mode as well, but interestingly, bond markets remain somewhat spooked with Treasury yields reaching a new low again. Meanwhile, the Shanghai Composite is finally playing catchup, bouncing nearly

3

Brace for a bear market

Via BMO Capital Markets: There are moments of inflection in the market when the phrase ‘prices have changed more than the facts’ becomes particularly apropos and today’s Treasury rally ostensibly qualifies. We’ll caution here however that the devolving macro narrative is very consistent with with such a repricing. The overnight round of Asian central bank cuts

1

Macro Morning

By Chris Becker  More stability overnight on Wall Street with European markets also rebounding, while interest rates also rose on the better risk sentiment, the oil price fell again as the DOE inventory report underwhelmed. Looking at the action on Asian markets yesterday, where the Shanghai Composite continued to fall, albeit at a slower rate,

134

Macro Afternoon

A mixed day is better than an across the board selloff with shares here in Asia putting in scratch sessions and some advances. The RBNZ has surprised all with a double cut at its interest rate meeting, sending both Kiwi and Aussie falling to new record lows, while gold has put in another big bid for

0

UBS: Risk assets to keep falling

Via UBS: The tepid signs that global growth was bottoming are likely to be overwhelmed by the negative shocks from rising trade tensions. Moreover, the cushion from valuations/risk premia is quite low. The UBS Synthetic Trade War Monitor helps us track where trade sensitive assets sit within the trade talks ‘fear – complacency’ spectrum. Whilst

5

When to buy crashing equities

Via Damien Boey at Credit Suisse: Equities are selling aggressively and bonds are rallying on the back of recent escalation of trade wars. Investors are behaving as if the end of the world is nigh. But is this really the case? Our thesis is that the world is suffering its worst uncertainty shock since the

1

Macro Morning

By Chris Becker  Some stability returned to risk markets overnight with the inevitable bounceback after so much selling, mainly due to the Chinese Yuan finally stabilising, lifting the USD and dragging equities with it. Wall Street lead the rise after European markets remained in the doldrums, while the oil price fell as other commodities struggled

67

Macro Afternoon

A slowdown but not a cessation of selling activity in stocks across the region today, with currency and bond markets closely watching the Yuan fix for stability. The RBA meeting was a fizz but the Australian dollar leapt higher, while gold took a very small breather after its big surge overnight. Meanwhile, the Shanghai Composite continues

11

What shares to buy in a trade war

Via the excellent Damien Boey at Credit Suisse: Investors are rightly concerned that trade wars are getting out of control. Within the space of a few days we have seen: US President Trump announce 10% tariffs on remaining Chinese imports, without giving Chinese authorities advance notice. The PBoC has allowed the USD/CNY to appreciate through

5

Macro Morning

By Chris Becker  A bath of blood on equity markets overnight as the US/China trade war deepens with US stocks falling around 3% across the board, now wiping out all the nominal gains for the year. It was a run to safe havens instead, as gold surged alongside Yen while US Treasury yields plummeted to

80

Macro Afternoon

As expected, it hasn’t been a good start to the week for Asian stock markets as the new round in the US trade war with China squashes all evidence of confidence that had been building up previously. Currency markets are feeling the heat too, with gold breaking out to a new daily high while its a

1

Macro Morning

By Chris Becker  The end of the northern hemisphere summer break usually spells doom and gloom on risk markets, and that’s where the mood takes us at the moment with Friday nights US unemployment print unable to shake confidence back into the complex. More threats and cajoling on both sides of the US/China trade war