Stocks and Oil pare early strong gains; USD moving lower

Summary:

• Stocks fade after making a strong start on Trump-Xi deal

• Oil also boosted by Canada move; but hands back some early gains

• USD remains lower despite ISM beat

• Key markets to watch this week: US500, AUDUSD, Soybean and Oil.WTI

• Heavy selling in crypto as Bitcoin moves back below $4000

 

The beginning of the week has been characterised by large gains seen in risk assets such as stocks and crude oil, but as the as the afternoon wore on some of these have been pared. The catalyst for the push higher in equities was an apparent truce in the trade wars between the US and China following the Trump-Xi dinner over the weekend, but whether this provides a lasting boost remains to be seen. The US500 moved strongly higher above the 2800 level, but has since pulled back and is now not too far from where it ended on Friday.    

 

The OPEC summit is still ahead (Thursday) but prices of both OIL and OIL.WTI were up nearly 5% following an announced production cut by the Canadian province, Alberta, as well as the G20 news. It represents more than 300kbd or some 0.3% of global output and is seen as a part of the OPEC+ move to stabilize prices. Investors expect more cuts from the OPEC and Russia. However, similar to stocks the market as pulled back a little and Oil is higher by around 2.5% on the European close.

 

The main data releases today have centred on the manufacturing sector with the latest figures from the US topping estimates. For the month of November the ISM index from the US rose to 59.3 vs 57.5 expected with the past print 57.7. The rebound see the gauge return to around the middle of the level seen in the past 18 months after it was threatening to push lower in October. The rebound in employment and new orders are the main positives here but the fall in prices paid is a little worrying for the US dollar. The fall to 60.7 represents the largest decline in 6 years, with the plunging prices for oil, a major contributor of manufacturing expenses, may be a contributor to the drop. While the ISM release is often one of the bigger pieces of US data, today it is very much playing second fiddle to the fallout from the G20 meeting which has seen the greenback slide across the board against nearly all of its peers.  

 

Here’s a short video on our Key markets to watch this week; US500, AUDUSD, Soybean and Oil.WTI.

Last but not least there’s been some notable declines in the crypto space with Bitcoin falling over 7% to drop back below the $4000 mark. Huawei Cloud officially launched its Blockchain Service (BCS) globally on November 15, according to the company’s press release. The company had launched BCS previously for commercial use only in China, but now it is available for also non-China customers. As the press release explains, “the service helps global enterprises and developers create, deploy, and manage blockchain applications quickly and at minimal cost on HUAWEI CLOUD”. Further, the company says that “using BCS, company can establish a blockchain system perfectly suited to its own business in just 5 to 10 minutes”.