Kuwait Finance House: Market Commentary - 2 December

Transcription

1. Mon , 02 Dec 2019 Report produced on Mon, 02/Dec/2019
2. Forex Market JAPANESE YEN 110 .00 109.00 108.00 107.00 106.00 105.00 20D SMA 29-Nov 22-Nov 15-Nov 8-Nov 1-Nov 25-Oct 18-Oct 11-Oct 4-Oct 27-Sep 20-Sep 13-Sep 6-Sep 30-Aug 104.00 1.14 1.13 1.12 1.11 1.10 1.09 50D SMA 29-Nov 22-Nov 15-Nov 8-Nov 1-Nov 25-Oct 18-Oct 11-Oct 4-Oct 27-Sep 20-Sep 13-Sep 6-Sep 1.08 30-Aug 1M %chg 3M %chg 109.51 0.59% 2.83% - Japan's government is considering putting together a large-scale economic stimulus package with fiscal spending exceeding $92 billion, the Nikkei newspaper said, as soft global demand and the U.S.China trade war dampen the country's fragile recovery. - Adding strain to Japan's tattered finances, the government will issue more bonds to fund public works spending of up to 4 trillion yen ($36.82 billion) and make up for tax revenue shortfalls as firms feel the pinch from the trade tensions, the newspaper said on Saturday. - That will roughly match a 13.5-trillion-yen spending package put together in 2016, when Britain's vote to exit the European Union jolted markets and heightened uncertainty over Japan's export-reliant economy. - The government will also issue more deficit-covering bonds, as tax revenues for the current fiscal year will undershoot its initial estimate by around 2 trillion yen, the Nikkei said. 50D SMA EURO 20D SMA CLOSE CLOSE 1M %chg 3M %chg 1.1015 -0.86% -0.36% - Despite the confluence of potential German political uncertainty, EUR/USD has thus far been able to shrug it off as it bounced from the opening dip to 1.1011. - Borrowing costs in Germany, France and the Netherlands rose above one-month lows on Friday, as euro zone inflation accelerating faster than expected in November was seen bringing some relief to the European Central Bank's new chief. - Germany's benchmark 10-year Bund yield was up around a basis point on the day in late trade at 0.35%, after hitting one-month lows on Thursday as investors fretted about U.S.-China trade talks. - European shares ended the week with their worst day this month as a clutch of fairly upbeat economic data on Friday failed to assuage investor concerns about a setback in Sino-U.S. trade talks after China's rebuke over a U.S. law on Hong Kong.
3. Forex Market POUND STERLING 1 .31 1.29 1.27 1.25 1.23 1.21 20D SMA 29-Nov 22-Nov 15-Nov 8-Nov 1-Nov 25-Oct 18-Oct 11-Oct 4-Oct 27-Sep 20-Sep 13-Sep 6-Sep 30-Aug 1.19 50D SMA TURKISH LIRA 6.00 5.90 5.80 5.70 5.60 5.50 20D SMA 50D SMA 29-Nov 22-Nov 15-Nov 8-Nov 1-Nov 25-Oct 18-Oct 11-Oct 4-Oct 27-Sep 20-Sep 13-Sep 6-Sep 30-Aug 5.40 CLOSE 1M %chg 3M %chg 1.2933 0.53% 6.11% - The British pound began the week on the back foot as polls showed a tightening U.K. election race, while an unexpected rebound in Chinese manufacturing supported risk appetite. - Sterling was a quarter of a percentage point lower at $1.2910 as a clutch of polls showed Prime Minister Boris Johnson's Conservative Party losing some of its lead ahead of the Dec. 12 election, adding uncertainty. - CBI Realized Sales improved to -3 in November, compared to -10 a month earlier. Consumer confidence remains mired in negative territory, but there was some good news as consumer credit rose to GBP 5.6 billion, above the estimate of GBP 4.5 billion. - There was some positive economic news last week, as second-estimate GDP increased at an annual rate of 2.1%, which was higher than the 1.9% estimate. Analysts had expected that the GDP reading would confirm the initial release of 1.9%, and the upward revision was a pleasant surprise for investors. CLOSE 1M %chg 3M %chg 5.7460 0.22% -1.59% - Turkey's economy is expected to have returned to year-on-year growth in the third quarter of 2019 after three consecutive quarters of contraction, a Reuters poll showed on Friday, while forecasts for year-end growth also turned positive. - The economy went into recession last year after a currency crisis saw the Turkish lira lose nearly 30% of its value against the dollar, which sent inflation and interest rates soaring and caused domestic demand to weaken significantly. - But there have been signs of recovery since then, as inflation fell to single digits in October, largely due to a so-called base effect, and loan growth accelerated thanks to rate cuts by the central bank. - The median estimate in a Reuters poll of 17 economists showed the economy expanding 1% year-onyear in the third quarter. Forecasts ranged from a contraction of 0.2% to an expansion of 1.6%.
4. US Treasury & Dollar Index 10Y US-TREASURY 1 YR HISTORY OF YIELDS (BID) CLOSE 1M %chg 3M %chg 1.81 -3.22% 17.15% 3.5 - The dollar gave up early gains to trade slightly lower on the day against a basket of currencies on Friday as a still unsigned partial U.S.-China trade deal kept investors on edge and the shortened holiday week limited currency moves. - The dollar index, which compares the greenback against six other major currencies, was down 0.12% at 98.253. Earlier in the session, the index rose as high as 98.544, its highest since Oct. 15. For the week, the index was about flat. - Gold prices fell after hitting their highest in more than a week on Monday, as stocks gained on betterthan-expected China factory data and the greenback strengthened, despite fresh uncertainty over a U.S.-China trade truce. - U.S. Treasury yields were steady on Friday after China said it would retaliate after the United States passed legislation backing anti-government protesters in Hong Kong, potentially complicating the chance of a bilateral trade deal. 3 2.5 2 1.5 1 TODAY'S KEY ECONOMIC INDICATOR RELEASES DOLLAR INDEX INDICATOR wh Ctry / Regn Time For Prior Consensus 100.00 ISM Mfg Prices Paid US 02/Dec 19:00 Nov 45.5 47.0 99.50 Construction Spending MM US 02/Dec 19:00 Oct 0.5 0.4 98.50 BRC Retail Sales YY GB 03/Dec 04:01 Nov 0.10 98.00 Markit/CIPS Cons PMI GB 03/Dec 13:30 Nov 44.2 44.5 97.50 Producer Prices MM EU 03/Dec 14:00 Oct 0.1 0.0 97.00 Producer Prices YY EU 03/Dec 14:00 Oct -1.2 -1.9 96.50 Redbook MM US 03/Dec 17:55 w/e -0.4 96.00 Markit/CIPS Mfg PMI Final GB 02/Dec 13:30 Nov 48.3 ISM Manuf New Orders Idx US 02/Dec 19:00 Nov 49.1 Markit Mfg PMI Final US 02/Dec 18:45 Nov 52.2 20D SMA 50D SMA 29-Nov 22-Nov 15-Nov 8-Nov 1-Nov 25-Oct 18-Oct 11-Oct 4-Oct 27-Sep 20-Sep 13-Sep 6-Sep 30-Aug 99.00 48.3
5. Daily Market Report KWD - CBK FIX 0 .3046 0.3044 0.3042 0.304 0.3038 0.3036 0.3034 0.3032 0.303 0.3028 0.3026 16/Dec/18 4/Feb/19 CENTRAL BANK OF KUWAIT 26/Mar/19 15/May/19 4/Jul/19 23/Aug/19 12/Oct/19 1/Dec/19 20/Jan/20 MARKET SUMMARY KWD (CBK FIX) CLOSE 3M% CHG 0.30370 0.07% POLICY RATES INDICATOR ON Repo Rate As of 31/Oct/'19 Value 2.25 Prior 2.25 Change 0.00 1W Repo Rate 31/Oct/'19 2.50 2.75 -0.25 1M Repo Rate 31/Oct/'19 3.00 3.25 -0.25 KWD ON Rate 31/Oct/'19 10.00 10.00 0.00 Discount Rate 31/Oct/'19 2.75 3.00 -0.25 INSTRUMENT EUR OPEN 1.1007 HIGH 1.1028 LOW 1.0979 CLOSE 1.1015 %CHG 1D 0.07% GBP 1.2908 1.2947 1.2876 1.2933 0.17% JPY 109.5 109.66 109.38 109.51 0.01% Tenor ON Value 1.54 Tenor 3M TRY 5.7486 5.7659 5.73 5.746 -0.08% SW 1.59 6M 1.90 Dollar Idx 98.345 98.544 98.225 98.273 -0.10% 1M 1.70 1Y 1.95 Brent 63.77 63.86 62.36 62.43 -2.25% 2M 1.84 WTC - - - 58.12 0.00% Gold 1455.8 1466.311 1452.48 1463.9 0.40% OTHER C-BANK RATES KWSE Index 5938.02 6012.72 5938.02 6012.72 1.42% INDICATOR KIBOR RATES Tenor ON SW 1M Value 1.69 2.19 2.50 Tenor 3M 6M 1Y Value 2.69 2.94 3.19 LIBOR RATES Value 1.91 Value Prior Change FED Target Rate As of 30/Oct/'19 1.75 1.00 0.75 ECB Refinancing Rate 10/Mar/'16 0.00 0.05 -0.05 BOE Bank Rate 02/Aug/'18 0.75 0.50 0.25 BOJ Prime Rate 12/Jul/'19 0.95 1.00 -0.05 TRY ON Lending Rate 24/Oct/'19 15.50 18.00 -2.50
6. Global Top News KEY INTERNATIONAL STORIES Stocks tick up on upbeat China factory reports , trade talk hopes Investors expect international stocks to outperform U.S. in 2020 - Global shares rose on Monday and oil rebounded after upbeat China manufacturing surveys and as investors clung to hopes Beijing and Washington could reach a compromise in trade talks. - MSCI's index of Asia-Pacific shares outside Japan gained 0.46%, reclaiming some of its loss on Friday while Japan's Nikkei jumped 1.11%. - U.S. stock futures ESc1 gained 0.31% to near record highs after a dip in a truncated U.S. session on Friday due to Thanksgiving holiday. - Even though the U.S. stock market continues a record-breaking rally that has sent the benchmark S&P 500 index up nearly 25% for the year, investors appear to be looking elsewhere for better values in the year ahead. - World stock funds brought in $8.2 billion in investor inflows over the last two weeks, breaking a losing streak that dated back to early September, according to Investment Company Institute data. - U.S. equity funds, meanwhile, lost more than $10 billion in outflows over the last two weeks, extending a retreat that has spanned seven of the last eight weeks. Brexit, weak global demand to hurt UK in 2020, industry warns China's PBOC has room to ease policy but won't squander options - Brexit pressures and political uncertainty have prompted the Confederation of British Industry and a manufacturing trade body, Make UK, to downgrade their growth forecasts for next year. - Official figures have shown that Britain's economy is growing at the weakest annual pace since 2010, and industry leaders see little or no improvement in 2020, even if Prime Minister Boris Johnson wins re-election and secures a Brexit divorce deal by a Jan. 31 deadline. - The CBI on Monday predicted economic growth of 1.3% this year and 1.2% in 2020, followed by a pick-up to 1.8% in 2021. - China has room to ease monetary policy further, but authorities should not be careless in how they use such stimulus options, a central bank official said on Friday, reinforcing its cautious stance. - "Our monetary policy has space...but such policy space cannot be squandered at will," Zhang Xuechun, the deputy director of the research bureau at the People's Bank of China (PBOC), said at a forum in Beijing. - Zhang's remarks echoed those of PBOC governor Yi Gang, who has said that China is in no rush to follow other countries in significantly loosening monetary policy but has ample options to help prop up slowing growth. ECB board candidates back bond buys and negative rates China wants U.S. tariffs rolled back in phase one trade deal - The two European Central Bank board nominees up for confirmation next month struck a dovish tone on Friday, arguing That weak growth and subdued inflation prospects justify stimulus. - The ECB approved fresh stimulus in early September, generating unprecedented public discord among policymakers, which culminated in the resignation of German board representative Sabine Lautenschlaeger. - Beijing's top priority in any phase one trade deal with the United States is the removal of existing tariffs on Chinese goods, China's Global Times newspaper reported on Sunday, amid uncertainty on whether the two sides can end a 17-month trade war that has depressed global growth. - "Sources with direct knowledge of the trade talks told the Global Times on Saturday that the U.S. must remove existing tariffs, not planned tariffs, as part of the deal," according to the report. DISCLAIMER: This document and its contents do not reflect the opinions, views, policies or positions of Refinitiv or its affiliates and they are prepared for Kuwait Finance House (KFH)’s and their clients internal consumption only and do not constitute an offer, or the solicitation of an offer, or advice to buy or sell a security or to make a particular investment or follow a particular strategy or enter into any agreement. The information and any views expressed are given as of the date of writing and are subject to change. While the information has been obtained from sources believed to be reliable, Refinitiv does not warrant that it is accurate or complete and it should not be relied on as such. Responsibility for any decisions taken by KFH (including but not limited to its affiliates and subsidiaries) on the basis of information contained herein solely rest with the end user i.e. KFH’s clients. Market Data and News Source is Refinitiv Eikon. Refinitiv its affiliates, subsidiaries, employees, and contractors accept no liability for any direct or indirect loss arising out of the use of this document or its contents. Market data & News sourced from Refinitiv Eikon