The titles are full of extra meaning, when fear turns into hope. This applies as much to the upward moves as to the downward ones. The largest intraday rallies in the financial markets, conventional wisdom suggests, come in the most bearish periods. It remains to be seen if last night's trade war news shows a short-term pivotal point. However, the trends that drive market fundamentals have not changed and, for now, should be remembered and respected.
3. Will Asian markets capture the euphoria? Having recorded a rather harsh performance during yesterday's session, the rebound on Asian markets today will be very interesting. The key metric, in the short term, should be if today's rally (supposedly) recovers yesterday's losses. This will provide a useful indicator of sentiment.
The risk is that there are too many things in the same Asian region to inspire sustainable trust. It looks like a box of bait in this corner of the planet. Economic data is overwhelming investors, as China's monthly data dump will be in focus tomorrow. And the situation in Hong Kong is becoming frightening, with news that Chinese military personnel are now building on the border of the country as protests.
4. Another bias for the global economy: A new injury to the global economy was also opened yesterday during Asian trade. Singapore GDP data was released and showed a slower than expected economic growth in the second quarter. The press adds to the series of weak GDP data recently released all over the world, and reaches the heels of the contraction of British GDP on Friday. The growth numbers of Singapore arrived with a particular sting, however.
The small international trade-sensitive economy is considered one of the "coal canaries mines" for global economic prospects. At a time when fundamentals are deteriorating, yesterday's Singapore GDP press fueled fears that the global economy is heading towards recession.
5. The US IPC is very active, but does not change the equation too much: The release of data of greatest impact in European and North American trade was data on US CPIs last night, and perhaps to the dismay of market bulls, it came a little warmer than expected. The data revealed a 2.2 percent price increase for the US economy over the past 12 months, above the 2.1 percent estimate. He held back the excitement for a potential 50 basis point cut from the Fed next month and questioned whether the Fed could cut rates in this cycle.
In the end, however, the prospects only have marginally it has changed: the outlook for inflation is still low and the Fed's aggressive cuts are still integrated into market prices.
6. Beware of contacting Australian workers today: The day ahead, at least for local markets, will be highlighted by quarterly data on wage growth. No exceptions to the epidemic affecting globally developed economies, the growth of workers' pay has been worryingly low, and falling, in Australia for almost a decade. This happens despite the nominal improvements in the labor market in recent years and, until recently, the trend-level GDP growth.
ABS data today should reveal steady wage growth in the last quarter, 2.3 percent on an annual basis – another sign of the stubborn reserve capacity in the labor market that the RBA regrets so much.
7. Salary data and the RBA's next move: A lack of salary numbers today will only add weight to calls that the RBA has to cut back on rates – and it may need to be done as soon as next month. The central bank, by its own admission, sees little chance that the labor market will shrink sufficiently to drive the type of wage growth that will support future economic growth and inflation in the Australian economy. So, as is widely spoken, the question is a matter of when, and not Self, the RBA cuts again. Since it leads to today's data and monthly data on tomorrow's jobs, it's a Half and half possibility that the RBA will move next month.
8. Market supervision
ASX futures rose 48 points or 0.7% to 6540 near 7.20 AEST
- AUD + 0.6% to 67.95 US cents
- On Wall St: Dow + 1.5% S&P 500 + 1.5% Nasdaq + 2%
- In New York: BHP + 2.2% Rio + 2.5% Atlassiano + 2.1%
- In Europe: Stoxx 50 + 1% FTSE + 0.3% CAC + 1% DAX + 0.6%
- Spot gold from -0.7% to $ 1500.78 per ounce at New York
- Crude oil + 4.5% at $ 61.23 a barrel
- US oil up 3.7% at $ 56.97 a barrel
- Iron ore from -5.2% to $ US89.25 per ton
- Dalian iron ore + 2.2% to 640.5 yuan
- Aluminum LME + 0.8% at $ US1785 per ton
- LME Copper + 1.5% at $ US5828.5 per ton
- 2-year yield: US 1.67% Australia 0.71%
- 5-year yield: US 1.58% Australia 0.66%
- 10-year yield: US 1.70% Australia 0.93% Germany -0.61%
- 10-year gap between the United States and Australia near 6.45 AEST: 77 basis points
This column was produced in commercial collaboration between The Sydney Morning Herald, The Age and IG