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Morning Call: Softer dollar boosts commodities, stocks

Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.

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Article / 03 August 2017 at 7:00 GMT

Morning Markets: Asian stocks retreat despite record-high Dow

John G Acher

Consulting editor / TradingFloor

Norway

MM TABLE THURSDAY

Watchlist

Australia: International trade in goods and services (published)
France: Services PMI (0750 GMT)
Germany: Services PMI (0755 GMT)
Eurozone: Services PMI (0800 GMT)
UK: CIPS/Markit services PMI (0830 GMT)
EU: Retail trade (0900 GMT)
Czech Republic: Interest-rate decision (1100 GMT)
UK: Bank of England interest-rate decision (1100 GMT)
US: Weekly jobless claims (1230 GMT)
US: ISM non-manufacturing report on business (1400 GMT)
US: Manufacturers' shipments, inventories and orders, M3 (1400 GMT)
US: EIA weekly natural gas storage report (1430 GMT)

Asian shares fell broadly on Thursday, though the US dollar firmed against the region's currencies and the Dow industrials closed at a new record high overnight — above 22,000 points for the first time. It was the sixth consecutive record closing for the Dow.

The sharpest falls in Asian equities were in Korea, where the Kospi Composite index slumped on news of a planned corporate tax hike. In Hong Kong, an extended rally ran out of steam after reaching a two-year peak.

The USD gained in Asian trading after weakening briefly through 1.19 to the euro on Wednesday, crossing that level for the first since the start of 2015.

The corporate earnings season continues. BMW profits rose on record car sales to China, and Siemens profits beat estimates though the conglomerate reported weaker orders for its ts renewable energy and power and gas units.

The Bank of England is scheduled to announce the results of its policy meeting at Bank at 1100 GMT, and French, German and Eurozone PMIs are due soon.

Market signals

Asian session

Most Asian markets retreated today, mostly in response to domestic corporate earnings
Korea's Kospi Composite fell on a news of a hike in corporate tax
The Kospi composite was down 1.68% to 2,386.85 at 0509 GMT
Japan's Nikkei 225 tumbled, giving up Wednesday's gains
Nikkei 225 was down 0.28% to 20,024.37 at 0510 GMT
Japan's services PMI came in at 52.0 for July, down from 53.3 in June
China's Caixin services PMI came in at 51.5 in July vs 51.6 in June
China's July composite PMI came in at 51.9, the highest since March (June was 51.1)
The Shanghai Composite was down 0.21% to 3,278.10 at 0405 GMT
A lengthy share rally spluttered to an end in Hong Kong, after reaching a two-year peak
The Hang Seng was down 0.13% to 27,571.80 at 0530 GMT
Australia's services PMI came in at 56.4 for July, up from 54.8 in June
Australia's trade surplus narrowed in June, to $A856mln; $A1.8bn had been expected
The S&P/ASX200 closed down 0.28% at 5,728.40
Commonwealth Bank of Australia is facing court action over alleged money laundering
New Zealand's monthly commodity prices fell 0.8% in July
The Auckland, NZ housing market had its quietest July for seven years

Forex ahead

USD firmed slightly in Asian trade after falling to 15-month lows overnight
But USD lost ground against the yen; it was worth ¥110.6560 at 0528 GMT
Australian dollar edged slightly lower; it was worth 0.7935 at 0528 GMT

From the Floor

Bank of England. “Any rate outlook from here is about a one-rate-hike normalisation rather than a bigger programme,” says Hardy.

Slowdown. “What we are seeing in equities is a slowdown in many markets,” says Garry.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

1..2..3
Today’s hard data on consumer spending in the Eurozone is expected to reaffirm that Europe’s economic recovery remains on track, writes James Picerno.

Troubled Venezuela
As Venezuela edges towards isolation and dictatorship, and potentially even civil war, upcoming bond repayment dates will cause further anxiety among investors, says Michael Boye.

Lowdown on the nonfarm
US jobs creation is estimated to have slowed in July after a sizzling pace in June, and average hourly earnings growth is seen remaining sluggish, says John Acher in a preview of the data.

Bank of England

An announcement from the BoE's policy meeting is expected on

Thursday at 1100 GMT. Photo: Bank of England website

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