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Jan 15, 2019

EU FX I Currencies: Weak German data lifts dollar, sterling slips before Brexit vote

Spriha Srivastava

RT: Dollars cash 100 dollar bills 160516
The U.S. dollar rose against the euro on Tuesday after data showed Germany’s economy slowed in 2018, and sterling slipped ahead of a parliamentary vote on the United Kingdom’s withdrawal from the European Union.
Growth in Europe’s largest economy slowed to 1.5 percent in 2018, the German government reported on Tuesday. That was the slowest rate of GDP growth in five years. Investors are also worried about slower growth around the world due to trade disputes driven by U.S. President Donald Trump’s policies.
Against the dollar, the euro dropped to a five-day low of $1.141 after the data was released. In mid-morning trade, the single currency had retraced some of its losses, and was last at $1.1385.
Analysts said that while the German economic figures were in line with expectations, the gloomy picture added to growing doubts about whether the European Central Bank will raise interest rates at all in 2019.
Investors are also closely watching sterling with British Prime Minister Theresa May widely expected to lose a vote in parliament later Tuesday on her Brexit deal.
“The market is anticipating the UK parliamentary vote on the withdrawal agreement,” said Shahab Jalinoos, head of foreign exchange strategy at Credit Suisse in New York. “The vote is obviously essential to Sterling, but the event is big enough to draw global attention.”
Other analysts expect the pound will take a major beating if May loses the vote by a wide margin since it could push Britain closer to a chaotic exit from the EU.
Sterling traded down 1.05 percent against the dollar at $1.272.
The greenback gave back some gains after the U.S. Labor Department reported that producer prices fell in December by the most in more than two years. The latest sign of tame U.S. inflation was not enough to reverse the overall upwards trajectory of the dollar on the day.
Although the U.S. government shutdown continued, “the impact is still too difficult to measure, especially in foreign exchange terms,” said Jalinoos.
A shock contraction in Chinese trade and worries over the U.S. economy losing stream have bred fears of a global downturn that could see the Federal Reserve refrain from tightening monetary policy this year.

Source: CNBC

Bond Yields Closing Report: US Treasury yields tick higher after UK lawmakers reject Brexit plan

Thomas Franck, Silvia Amaro

U.S. government debt yields inched higher Tuesday after United Kingdom lawmakers renounced Prime Minister Theresa May’s Brexit plan and rejected the deal crafted between the U.K. leader and the European Union.
The yield on the benchmark 10-year Treasury note, which moves inversely to price, was just higher at 2.711 percent, while the yield on the 30-year Treasury bond was higher at 3.072 percent.
May lost by 230 votes after members of the U.K.’s House of Commons voted 432 to 202 to reject the deal. The Withdrawal Agreement faced criticism across the political spectrum. The rejected agreement was the only deal brokered with the EU on how Britain should exit the bloc in March of this year.

U.S. Markets Overview: Treasurys chart

US 3-MOU.S. 3 Month Treasury2.4510.0050.00
US 1-YRU.S. 1 Year Treasury2.569-0.0050.00
US 2-YRU.S. 2 Year Treasury2.533-0.0020.00
US 5-YRU.S. 5 Year Treasury2.5290.000.00
US 10-YRU.S. 10 Year Treasury2.7130.0030.00
US 30-YRU.S. 30 Year Treasury3.0740.0140.00
The fixed-income moves came after fresh data out on Monday showed Chinese December exports and imports dropping unexpectedly. These figures deepened concerns of a slowdown in the world’s second-largest economy.
At the same time, the divisions between Democrats and Republicans over a border wall continue, meaning there is no end in sight for the re-opening of the U.S. government. The longest ever shutdown in U.S. history is among the top worries for money managers.

Source: CNBC

Asia, Europe & US Markets Closing Reports


Asia markets trade higher as investors wait on crucial Brexit vote

Saheli Roy Choudhury

Asia Pacific markets mostly traded higher Tuesday despite lingering concerns over an economic slowdown in China, which dampened sentiment at the start of the week after China released trade data.
South Korea’s Kospi added 32.66 points, or 1.58 percent, to 2,097.18 while the Kosdaq gained 7.30 points, or 1.07 percent, to 690.39.
In Japan, the benchmark Nikkei 225 added 195.59 points, or 0.96 percent, to 20,555.29 after resuming trade on Tuesday — the Japanese market was closed Monday for a public holiday.
Greater China markets gained: Hong Kong’s Hang Seng index rose 1.82 percent in late-afternoon trade, while mainland Chinese markets rose as the Shanghai composite added 34.58 points, or 1.36 percent, to 2,570.34.
Major indexes in Singapore and India also rose.
Australia’s ASX 200 was up 41.20 points, or 0.71 percent, at 5,814.60 as the heavily-weighted financial subindex added 0.66 percent while the energy and materials sectors also posted gains.
Meanwhile, the Australian dollar traded at $0.7216 as of 3:42 p.m. HK/SIN, climbing from an earlier low of $0.7188.
Asia’s gains came despite declines on Wall Street overnight as the U.S. corporate earnings season kicked off. Still, U.S. futures also pointed to a positive open Tuesday.
“Risk is under modest downward pressure after yesterday’s disappointing December Chinese export data and confirmation of weak euro area industrial production fuelled concerns that a synchronised global manufacturing down-swing is underway and possibly intensifying,” analysts at ANZ Research wrote in a Tuesday morning note.
The analysts added that resolving trade uncertainty is “fundamental” to stabilizing the outlook, referring to an ongoing trade dispute between Washington and Beijing.
In the currency market, the dollar index, which measures the greenback against a basket of its peers, traded at 95.563. The Japanese yen, considered a safe-haven asset, fetched 108.61 to the dollar.
The British pound traded at $1.2885 as of 3:46 p.m. HK/SIN, climbing from levels below $1.2740 in the previous week. Sterling will be a focus for investors as lawmakers vote on U.K. Prime Minister Theresa May’s Brexit deal to leave the European Union.
The vote is widely expected to be defeated in parliament Tuesday, but could potentially still trigger a violent market reaction, according to some analysts.
“Today’s vote is considered a ‘buy the rumour, sell the fact’ play for the pound especially if the Brexit agreement is defeated by more than 100 votes,” analysts at Singapore’s DBS Group Research wrote. “It is still too early to take off the risk for the pound to fall to its post-referendum low near 1.20 this year.”


European markets edge higher ahead of crucial Brexit vote; Italian banks struggle

Chloe Taylor,David Reid,Sam Meredith ,Silvia Amaro

European stocks registered some late buying on Tuesday, as market participants braced for a showdown in Westminster over the U.K. government’s Brexit plan.

European Markets: FTSE, GDAXI, FCHI, IBEX

FTSEFTSE 100FTSE6895.0240.000.58708599193
The pan-European Stoxx 600 finished up around 0.3 percent at the closing bell, with most sectors and all major bourses in positive territory.
Europe’s health care sector led the gains, while autos was also higher amid news China is set to provide more supportive measures to stabilize its cooling economy. Fiat Chrysler and Ferrari were the top sectoral performers, with shares of both firms rising by around 2 percent.
Looking at individual stocks, Britain’s Hays surged higher Tuesday after reporting an 8 percent increase in quarterly net fees. Shares of the staffing company were up around 4.4 percent higher on the news.
Meanwhile, Italian banks slumped toward the bottom of the index during Tuesday’s trade. It came after reports suggested the European Central Bank could be set to ask Rome’s notoriously fragile lenders to set aside further capital to deal with impaired loans. Italy’s Ubi Banca and Banco BPM were the worst performers, with shares in both tumbling more than 4 percent.
Elsewhere, official data released showed Europe’s largest economy grew at its weakest rate in five years in 2018. Economic output in Germany increased 1.5 percent last year, compared to 2.2 percent in 2017.
Ahead of an official estimate of fourth-quarter growth in February, Carsten Brzeski, chief economist at ING Germany, said: “It looks as if a technical recession could only just have been avoided.”
“Needless to say that in the short run the biggest risk to this optimistic outlook is a disorderly Brexit which would come at the most inconvenient time for the German economy,” Brzeski added in a research note published Tuesday.
Stateside, shares managed slim gains in Tuesday morning trade, with all major indexes in positive territory. The Nasdaq led the gains, rising by around 1.4 percent in by 11:30 a.m. Eastern Time.
Brexit in focus
Market focus is turning to an all-important vote on Prime Minister Theresa May’s much-maligned Brexit deal on Tuesday.
Remarkably — and with less than 75 days to go before the country is set to leave the EU — May’s template to withdraw from the bloc faces virtually certain defeat.
That leaves the prospect of a complete collapse of government, a disorderly exit from the bloc or even the entire Brexit process being scrapped altogether over the coming weeks.
Sterling was trading at around $1.2765 Tuesday afternoon. The U.K. currency has fallen by around 10 percent against the U.S. dollar since reaching a recent peak of $1.4335 in April 2018, in part due to rising fears over the course of the Brexit process.
In the early afternoon, the euro hit a low of 1.1408 against the dollar, its lowest level since Jan 7th when the euro traded as low as 1.1390 against the dollar.
190115 UK Sentiment Brexit

Dow rises more than 100 points, Netflix leads tech rally

Fred Imbert,Ryan Browne

Stocks rose on Tuesday as Netflix led a rally in tech-related names after news that it would hike its monthly membership prices.
The Dow Jones Industrial Average rose 143 points as Microsoft and UnitedHealth outperformed. The S&P 500 gained 1 percent as the tech sector climbed 1.4 percent. The Nasdaq Composite outperformed, rising 1.6 percent.
Stocks pared some of their gains after U.K. lawmakers voted against the Brexit plans of U.K. Prime Minister Theresa May, worrying investors that global economic growth could take a hit as a result.
Shares of Netflix jumped 6.6 percent after a report said the company it would hike prices to its monthly memberships by 13 to 18 percent. This would be Netflix’s biggest price hike since it launched its streaming service more than a decade ago.
“Investors will likely view this above-Street estimate increase quite positively, bolstering confidence in subscriber trends, pace of revenue growth and ability to achieve guidance for margin gains,” said Doug Mitchelson, an analyst at Credit Suisse.
Facebook, Amazon, Apple and Alphabet rose more than 1 percent each.
The major averages also got a boost as J.P. Morgan Chase rose nearly 1 percent, erasing earlier losses. The stock initially fell after the banking giant reported lower-than-expected profit for the fourth quarter. The miss was J.P. Morgan’s first in 15 quarters. Shares of the bank dipped 1 percent.
Wells Fargo, meanwhile, posted earnings that topped expectations. Its sales, however, fell short of estimates. The bank also said it will operate under the Federal Reserve’s growth cap for longer than expected. Other banks, including Bank of America, Goldman Sachs and Morgan Stanley are scheduled to report quarterly earnings later this week.
Investors came into this earnings season jittery after a massive sell-off in December led analysts to trim their earnings estimates for the previous quarter as well as 2019.
“It’s now fair to say that downward revisions to 2019 S&P 500 EPS growth estimates have been a little worse than usual,” Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, said in a note. “The magnitude of the downward revision is now tracking a little bit worse than the median and average downward revision that occurred from 2000 to 2017. ”
So far, only 4.75 percent of S&P 500 companies have posted calendar fourth-quarter earnings. Of those companies, 87.5 percent have topped expectations. But worries around earnings were somewhat quelled amid positive news from Netflix and out of China.
The Dow briefly traded lower earlier in the day amid worries about U.S.-China trade. Sen. Chuck Grassley said Tuesday that U.S. Trade Representative Robert Lighthizer saw little progress in last week’s talks with China. The Dow briefly turned negative on Grassley’s comments before The two countries are trying to strike a deal to end a trade war that started last year.
“The real wild card is the trade talks here,” said Mark Esposito, CEO of Esposito Securities. “I do think we’ll come to some commonality here during the earnings season. That’s the big uncertainty that’s still looming out there.”
—CNBC’s Michael Bloom contributed to this report.

Source: CNBC

House condemns Steve King over racist remarks

By Michael Grunwald

Jim Clyburn
House Majority Whip Jim Clyburn (D-S.C.), the highest-ranking African-American in Congress, is pushing a resolution of disapproval against King that includes a broader denunciation of white supremacist and white nationalist movements. | Zach Gibson/Getty Images
UPDATE 3:32 p.m.:
The House voted overwhelmingly to rebuke GOP Rep. Steve King for making racist comments in a recent interview.
Story Continued Below
The rare resolution of disapproval, which included a broad denunciation of white supremacist and white nationalist movements, was passed on a 424-1 vote.
But some House Democrats argue the move doesn't go far enough and are pushing censure motions against the Iowa Republican.
House Democrats are preparing to formally rebuke Rep. Steve King over his recent racist comments, but some Democrats are pushing for a more high-profile punishment of censure for the Iowa Republican.
House Majority Whip Jim Clyburn (D-S.C.), the highest-ranking African-American in Congress, is pushing a resolution of disapproval against King that includes a broader denunciation of white supremacist and white nationalist movements.
Clyburn's motion will be voted on Tuesday afternoon, a day after Republican leaders voted to strip King of all his committee seats. GOP leaders have signaled they will vote for the measure, and some — like House Republican Conference Chairwoman Liz Cheney (Wyo.) — would like to see King retire.
"I am hopeful that we can make it unanimous," Clyburn said in an interview. "It's worded in such a way that Mr. King can vote for it, and step back from what he's said. He may not like it, in that we [use] his name in it. But if he is who he says he is, he'll vote for it."
Clyburn said he wasn't calling on King to step down from Congress, but he clearly hoped the Iowa Republican will give up his seat soon. King was first elected to the House in 2002 and narrowly beat out Democrat J.D. Scholten in 2018.
"I'm not calling for him to do anything," Clyburn added. "I call for him to display a little introspection here and decide whether or not he is good for this country. That is, if he is the patriot that he says he is. And if he is, I think that he will spare his Republican colleagues the pain of his continued presence in this body."
King on Monday night said in a statement that he wouldn’t step down even after losing his committee posts.
But some Democrats — including Reps. Bobby Rush (Ill.) and Tim Ryan (Ohio) — don't think the Clyburn resolution goes far enough. They want a censure vote on King — where the Iowa Republican would have to stand in the well of the House while his colleagues condemn him — and are pushing privileged resolutions to force that vote later this week.
Rush, in fact, will oppose the Clyburn motion, arguing it doesn't go far enough in condemning King's history of racist remarks going back more than a decade.
"While I strongly condemn white supremacy and white nationalism, my position remains unchanged. Anything short of censure is shallow," Rush said in a statement. "Steve King has made a career of making racist statements. That is the only thing he is known for and this pattern of rabid racism must be confronted head on by the House of Representatives."
Rush also cited the House's censure of Rep. Charlie Rangel (D-N.Y.) in 2010 as a reason for doing the same to King. Rangel was censured after a lengthy ethics probe found him guilty of violating House rules.
Story Continued Below
For his part, Clyburn said he is not opposed to censure — he will vote for it, in fact — but believes a resolution of disapproval "will get the biggest bipartisan vote." It was the same procedure used to punish GOP Rep. Joe Wilson (S.C.) after he yelled at former President Barack Obama during the 2009 State of the Union address.
Inside the House Democratic Caucus meeting on Tuesday, Clyburn argued to members that the disapproval resolution would garner more bipartisan support than the censure resolution and thus send a stronger message, according to lawmakers who attended the session.
“The aim is to get near-unanimous support,” said Rep. G.K. Butterfield (D-N.C.), a former chairman of the Congressional Black Caucus. “[Clyburn] thinks the motion for disapproval will get probably 430 votes and make a more resounding statement.”
Butterfield, however, said he would vote to censure King “in a heartbeat” if it came up for a floor vote.
“[Clyburn] did not discourage Mr. Ryan or Mr. Rush from pursuing their resolutions,” Butterfield said. “But he reminded them that there is a 48-hour requirement that has to be observed. And Mr. Clyburn’s resolution meets the 48-hour requirement.”
Rep. Hank Johnson (D-Ga.), a CBC member, expressed reservations about censuring King, warning it could be a slippery slope.
“I favor Jim Clyburn’s motion with more fervor because of the issue of free speech and the First Amendment,” Johnson said. “Even though someone may say something that is offensive, I believe they have that right. And they should retain that right as a member of Congress.”
“But members of Congress have a special responsibility to be magnanimous in their thinking, especially when they sit on these committees that deal with all of America, not just white America,” Johnson added.

Source: Politico

Crude Oil Price Closing Report: Oil rises 2 percent on supply cuts but global slowdown looms

Tom DiChristopher

RT: Oil workers Iraq OPEC 170511
Men work for Iraqi Drilling Company at Rumaila oilfield in Basra, Iraq,
Essam Al-Sudani | Reuters
Oil prices rose around 2 percent on Tuesday amid production cuts by OPEC and Russia as well as signs of lower U.S. oil stocks, but grim Chinese economic data raised fears for global growth.
Brent crude oil was up $1.26, or 2.1 percent, at $60.25 per barrel around 12:40 p.m. ET. The benchmark crude had fallen more than 2 percent on Monday.
U.S. West Texas Intermediate rose $1.31, or 2.6 percent, to $51.82.
“OPEC-led cuts and declining U.S. rig counts have bolstered market sentiment in the new year,” Singapore-based brokerage Phillip Futures said.
The Middle East-led Organization of the Petroleum Exporting Countries and other producers including Russia agreed in late 2018 to cut supply starting this month, seeking to rein in a global glut.
The bloc and its allies set a meeting for March 17-18 to monitor implementation of their pact, sources told Reuters, and another on April 17-18 on whether to extend cuts beyond the agreed six months.
Further help has come from data showing the number of U.S. rigs looking for new oil dipped slightly to 873 in early 2019, and a Reuters poll on Monday found that U.S. crude oil stockpiles were likely to have fallen last week.
The rig data could signal a slowing of the swift rise in output from the United States, which became the world’s top oil producer in 2018.
But analysts said a price recovery may be short-lived, as a darkening economic outlook could dampen growth in fuel demand.
“Any price rally is unlikely to be sustainable in the first half of the year simply because the demand for OPEC’s oil is expected to be lower than the projected output from the organization,” PVM Oil Associates strategist Tamas Varga said.
Crude prices fell more than 2 percent on Monday after data showed weakening imports and exports in China, raising new worries about a global slowdown.
But China’s National Development and Reform Commission offered some support on Tuesday, signaling it might roll out more fiscal stimulus.
Such positive signals and hopes for renewed U.S.-China talks to resolve trade tensions have boosted world stock markets and oil prices, but fears about global growth weigh heavily.
“It would seem that the market is having a rather hard time making up its mind as to which story to believe in,” consultancy JBC Energy said.

Source: CNBC

Gold Price Closing Report: Gold eases on stronger equities, dollar

3-4 minutes

RT: Gold bars with hand 170512
Gold eased on Tuesday as the dollar rose and stock markets climbed, but further losses were capped by concerns over slowing economic growth and prospects of a pause in U.S. interest rate hikes.
Spot gold fell 0.25 percent to $1,288.50 per ounce by 12:14 p.m. EST, while U.S. gold futures also shed 0.22 percent to $1,288.40.
“With the equity markets coming up once again, we are seeing a lesser need for safe haven assets such as gold and yen,” said David Meger, director of metals trading at High Ridge Futures.
“As a result, we are continuing to see a slight retracement off of the psychological $1,300 resistance level.”
Major world stock markets rose on Tuesday, supported by China’s plan to introduce policies to stabilise a slowing economy.
Also weighing on gold was a stronger greenback, which gained after weak economic data from Germany impaired the euro, making the metal more expensive for holders of other currencies.
However, lingering concerns triggered by weak economic data from across the globe raised doubts about the condition of the global economy, keeping gold’s underlying appeal intact, analysts said.
“Right now, there is a lot of insecurity about the stock markets, global economy and trade,” said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York.
“These concerns are holding gold up and one wrong move can pop gold up above the $1,300 level.”
Gold has been on a good run of form over the past few weeks, having hit its highest since mid-June on Jan. 4 at $1,298.42 an ounce, drawing support from a dovish stance from the U.S. Federal Reserve.
Fed Chair Jerome Powell earlier this month said the central bank had the potential to be patient with its monetary policy.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion.
“We view 2019 as a year of assets rebalancing and fresh money to flow into gold,” MKS PAMP Group said in a note, forecasting bullion to average $1,335 an ounce in 2019.
Investors are now focusing on Britain’s parliamentary vote on Prime Minister Theresa May’s Brexit policy.
Despite gold having already priced in a widely expected defeat for the British Prime Minister, uncertainty lies in what will happen after the vote, which “could generate some interest in gold” in Europe, said Philip Newman, director at Metals Focus.
Elsewhere, palladium rose 0.57 percent to $1,330.50 an ounce, continuing to trade at a premium to gold, hovering below an all-time peak of $1,342.43 hit last week.
“Palladium has been in a supply deficit for several years and is set to remain so in 2019,” MKS PAMP said.
Platinum fell 0.38 percent to $796.50 per ounce, while silver fell 0.47 percent to $15.76.

Source: CNBC