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KirbyIG

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  1. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 28 Oct 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount IBEX ITX SM 31/10/2019 Special Div 22 SX5E ITX SM 31/10/2019 Special Div 22 How do dividend adjustments work? As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is affected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  2. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 14 Oct 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount AS51 BXB AU 14/10/2019 Special Div 17 NIFTY TCS IN 17/10/2019 Special Div 4000 How do dividend adjustments work? As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is affected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  3. KirbyIG

    APAC brief - 11 Oct

    Markets spinning in circles as trade-talks get underway: It’s been a slightly dizzying 24-hours for the financial markets. Speculation is on overdrive regarding the likeliest outcomes for the US-China trade talks. Though it seems like chaos, it all amounts to little more than noise, as short-term traders have fun with trying to profit from the swings in sentiment. Fundamentally, little about the talks can be known yet. However, it seems investors’ cautiousness is turning to hope once again. Amidst all the noise, there was other rather high impact news reported last night. US CPI missed expectations very slightly. Some progress has seemingly been made in Brexit-talks between the UK and Ireland. And ECB minutes were also published. Choppy trade as markets speculate about trade-talks: Financial markets, particularly in Asia, swung from trade-war-headline to trade-war-headline yesterday, as traders madly speculated upon the likeliest of outcomes for current US-China trade talks. It all began with a South China Morning Post report that suggested Chinese delegates were planning to cut talks short, citing disagreements on the terms of discussions. It set off a flurry of reports and leaks from both the US and China, countering, confirming, countering, confirming each bit of news. The day’s trade became very choppy, as sentiment vacillated. The ASX200, just for one, swung from -0.3 per cent loss, to a 0.4 per cent gain, only to close flat for the day. Funny-money messing with the headlines: Though from the outside it might have seemed that markets were experiencing a series of manic-to-depressive episodes, the truth is a little more benign. The volatility was more a testament to behavioural-finance rather than fundamental economics, with price action more-than-likely driven by short-term traders, probably enabled by computers – or at least their own audacity – in a bid to make a quick buck. The substantial part of the market were at worst non-plussed: market activity was very low yesterday, demonstrating that things were hardly frenzied. Investors, broadly speaking, sat back and waited for firm clues for which direction trade-talks take, before moving decisively in the market. Cautious optimism takes hold of the markets: And judging by the price action witnessed in markets in European and North American trade, cautiousness is transforming very slowly into hope. Activity has been relatively low, yet still modestly higher than previous trading sessions this week. Stocks climbed across the board, with the S&P500 rallying over 0.5 per cent, the DAX climbing roughly the same, and the FTSE100 registering a 0.3 per cent jump. The better barometers of market fundamentals in bond, commodities and currency markets also demonstrated the greater hope for a trade-détente. The US 10 Year Treasury yield jumped 6 points, gold fell 0.8 per cent, and the Yen dipped 0.4 per cent. US CPI data shows Fed has room to cut rates: There were several other stories of fundamental significance last night. One: US CPI data was released, and showed that consumer price growth slowed once again last month. The headline monthly figure came in flat, leaving inflation at 1.7 per cent in the US on an annualized basis. The data will only feed the debate currently being undertaken by the US Fed as to how it should approach it’s inflation targeting, as price growth remains chronically low. For market participants however, the soft print is welcomed news. The Fed has the space to cut rates further, with relatively little risk of stoking an inflation breakout. Pound rallies on apparent Brexit-breakthrough: Brexit was also in the headlines in European trade, and though it manifested little in global market pricing, the news possessed some punch as it applies to UK assets. Optimism was bolstered by reports, following a meeting between UK PM Boris Johnson, and his counterpart from Ireland, Leo Varadkar, that both men could “see a pathway to a possible deal” on Brexit and the contentious Irish backstop. That news sent the Pound on quite a significant rally, pushing over 2 per cent higher overnight. This came despite was another disappointing GDP print out of the UK, which revealed growth in the UK contracted last month. ECB divided, but still expected to cut rates: The final bit of tier-1 news last night was the release of the minutes from the European Central Bank’s Minutes last meeting. There were two significant messages from the ECB. It collectively sees the need for greater fiscal stimulus in Europe, as the efficacy of monetary policy wanes. And the board remains rather divided on whether a fresh round of quantitative-easing in the Euro-zone will have any benefit to the bloc’s economy. That dissent forced traders to unwind bets slightly of future easing from the ECB. Nevertheless, more rate cuts are still being priced-in, with Euro likely to remain in its fundamental downtrend. Written by Kyle Rodda-IG Australia
  4. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 7 Oct 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount UKX BDEV LN 10/10/2019 Special Div 17.3 AS51 BXB AU 14/10/2019 Special Div 17 TOP40 EXX SJ 09/10/2019 Special Div 89700 How do dividend adjustments work? As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is affected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  5. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 30 Sept 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount RTY CLF US 10/03/2019 Special Div 4 How do dividend adjustments work? As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is affected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  6. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 16 Sept 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral adjustment on your account. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount AS51 SPK AU 19/09/2019 Special Div 1.9375 HSI 857 HK 16/09/2019 Special Div 0.777 HSCEI 857 HK 16/09/2019 Special Div 0.777 How do dividend adjustments work? As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is affected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  7. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 9 Sept 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral adjustment on your account. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount AS51 IFL AU 12/09/2019 Special Div 10 HSI 857 HK 16/09/2019 Special Div 0.777 HSCEI 857 HK 16/09/2019 Special Div 0.777 RTY CWH US 13/09/2019 Special Div 7.32 How do dividend adjustments work? This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  8. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 2 Sept 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral adjustment on your account. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount UKX ADM LN 05/09/2019 Special Div 21.2 AS51 MPL AU 04/09/2019 Special Div 3.5714 AS51 ASX AU 05/09/2019 Special Div 184.4286 AS51 WHC AU 05/09/2019 Special Div 17 RTY CMCT US 03/09/2019 Special Div 1400 How do dividend adjustments work? This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  9. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 26 Aug 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral adjustment on your account. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount AS51 CCL AU 27/08/2019 Special Div 4 AS51 COL AU 28/08/2019 Special Div 16.4286 AS51 TLS AU 28/08/2019 Special Div 4.2857 MEXBOL WALMEX* MM 26/08/2019 Special Div 30 RTY CMCT US 03/09/2019 Special Div 1400 How do dividend adjustments work? This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  10. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 19 Aug 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral adjustment on your account. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount HSI 151 HK 22/08/2019 Special Div 0.48 STI CIT SP 23/08/2019 Special Div 6 SIMSCI CIT CP 23/08/2019 Special Div 6 OMX TEL2B SS 23/08/2019 Special Div 6 MEXBOL WALMEX* MM 26/08/2019 Special Div 30 RTY MRTN US 23/08/2019 Special Div 65 How do dividend adjustments work? This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  11. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 12 Aug 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral adjustment on your account. Special Divs are highlighted in orange. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount UKX RBS LN 15.08.19 Special Div 12 RTY RILY US 14.08.19 Special Div 32.5 RTY CMCT US 16.08.19 Special Div 1400 SPX TDG US 15.08.19 Special Div 3000 How do dividend adjustments work? This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  12. Stocks recover losses on rate-cut hopes: Wall Street equities climbed into the close, after an ugly open for the US market overnight, while global bond yields continued to fall, on increased bets of interest rate cuts from the world’s largest central banks. When market action is still foggy, it can be hard to draw firm conclusions about cause-and-effect in price action. But it would strongly seem that the latter was responsible for the former during last night’s trade. Hence, US stocks were up on the basis that traders are pricing in a remarkably high chance that the Fed will be cutting interest rates by 50-basis-points at their next meeting, and that the ECB will be cutting rates next month, too. Cheap money versus cold, hard fundamentals: The impact to valuations of expected interest rate cuts has prettied-up an otherwise bearish market right now. It’s the short-term paradox that confounds people, sometimes: the economic outlook turns bad, so markets price-in lower rates, which drives money into the stock market, as investors chase yield. It’s an almost mechanical process that market prices blithely follow. And frankly, global equities have been juiced for months – to all-time highs, in some markets – as that dynamic plays-out. However, the underlying factors driving that trend are unstable, and reality can only be avoided for so long. Eventually, if the trend doesn’t turnaround, then the fundamentals will win out. Fundamental outlook still murky: And the fundamental outlook right at this moment isn’t looking positive. The global economy is probably closer to the end of the business cycle than it is the middle-or-beginning. And now a no-holds-barred US-China trade war threatens to accelerate that process. Commodity markets are still betraying best that sense of foreboding regarding the economic outlook. Oil plunged again overnight, as demand-side concerns ratcheted up once more after a bigger than expected build in US crude inventories last week. While gold prices have spiked, to trade as high as $US1510, as markets seek to hedge against lower global interest rates. RBNZ shocks econo-watchers: The Reserve Bank of New Zealand shocked financial markets yesterday, cutting interest rates at its meeting by 50-basis-points. A 25 basis-point cut was expected by the market leading into the meeting, but few in the market expected the RBNZ to pull out a rare “double-cut”. Such actions from a central bank more-often-than-not come in times of relatively severe financial or economic stress. The decision, therefore, rattled trader’s nerves somewhat. The New Zealand Dollar plunged nearly 2 per cent in the Asian session along, dragging the Australian Dollar down with it. The move from the RBNZ isn’t expected to be a “one-and-done” effort either: another cut is expected by year-end. A new era of central banking? The RBNZ’s decision to so aggressively cut interest rates speaks less of the current fundamentals in the New Zealand economy, but more the changing face of central bank policymaking across the globe. Afterall, the data coming out of New Zealand right now isn’t that bad, with growth around the long-term average, the labour market at notionally full-capacity, and inflation is only slightly below target. The move by the RBNZ is tantamount to a pre-emptive strike on a forecast slowdown in the global, and by extension, New Zealand economy. It marks another small milestone for economic policymaking: central banks are extending their mandates to managing the total fortunes of their respective economies. Bets of RBA cuts increased: In response to the RBNZ’s policy move, market participants have increased their bets that the RBA may prove, in time, to be a little more dovish than expected, too. The odds of future rate cuts were increased and brought forward by interest rate traders yesterday. The interest rate futures curve is suggesting that a rate cut in September is a sixty-forty proposition, a full-cut is baked in for October (once again), and another cut after that, before year-end, is roughly considered a 75 per cent chance. If such an outcome materializes, it would take the RBA’s overnight cash rate to a new low of 0.50 per cent. Lower rates and currency supports ASX: That dynamic smashed the Australian Dollar yesterday, with the local unit touching decade-long lows at the 66-cent level. Australian Government Bond Yields also notched-up a few (perhaps unwanted) records, too: the 3 Year Government Bond yield fell to a new record low of 0.64 per cent, while the 10 Year Government Bond yield fell to 0.95 per cent. Though clearly a sign of the prevailing concern the market possesses for the Australian Growth outlook, the tumble in the currency and risk-free rates juices the ASX200 yesterday. The benchmark index waivered alongside its regional counterparts in the early stages yesterday, only to consolidate its gains as the AUD and yields dropped. Written by Kyle Rodda-IG Australia
  13. Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 29th July 2019. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. NB: All dividend adjustments are forecasts and therefore speculative. A dividend adjustment is a cash neutral adjustment on your account. Figures and adjustment dates can be affected by public holidays. Special Divs are highlighted in red. Special Dividends Index Bloomberg Code Effective Date Summary Dividend Amount NIFTY HDFCB IN 01/08/2019 Special Div 500 RTY JBSS US 05/08/2019 Special Div 240 How do dividend adjustments work? As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is affected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
  14. The S&P500 rallied to another record high, as Wall Street shrugged off poor earnings from industrial mega-companies Boeing and Caterpillar, and instead focused on solid-enough results from US-tech giants. The rally was supported by a new-leg lower in global bond yields, after European manufacturing PMI data greatly disappointed expectations, and reaffirmed the continued slowdown in the Eurozone economy. That gave the DAX a lift. The Euro slipped, the Dollar edged higher, and gold climbed by half-a-per-cent, too. Oil prices dropped, even in light of a larger than expected drawdown in US crude oil inventories, as commodity markets remain fixed on concerns regarding the global economic outlook. ASX breaks to fresh decade-long highs: The ASX200 received a double-dose of sentiment-boosting news yesterday. The first pertained to reports that the US would be sending top-diplomats to China to restart trade negotiations next week. The second related to Westpac’s economics team’s (lead by interest-rate-Oracle, Bill Evans) pronouncement that it now expects the RBA to cut rates to 0.50 per cent by February. The stories generated the bullish-one-two combo that stock-markets always hunger-for: an ostensibly rosier growth outlook; and the prospect of easier monetary policy. The ultimate result was an ASX that touched fresh 11-year highs during intraday – even despite a sell-off in the large-cap mining stocks, following a tumble in iron ore prices. Governor Lowe Speech to headline local calendar: The economic calendar has been especially light in Australia this week. Not that any new information would likely change current fundamentals. Growth is weak, the labour market slack, and inflation subdued. The RBA ought to cut interest rates again, eventually, to combat this dynamic. The highlight of the week from Australian econo-watchers comes today, and should be of intellectual-interest given yesterday’s Westpac interest-rate call. RBA Governor Philip Lowe is scheduled to talk on the subject of “Inflation Targeting and Economic Welfare”. What’s revealed by the Governor is unlikely to move markets too much; however, it will provide some clarity on the RBA’s mentality right now. The (dis)inflation question: Really, Governor Lowe’s speech might well be viewed as a testimony on the RBA’s recent policy shifts. A contentious subject in the world of macroeconomics and policymaking is what to do about (dis)inflation. In particular: what causes it, why it’s a become a problem now, how to address it, and whether current policy settings are making it better – or even worse. Governor Lowe’s words today, to borrow a phrase from the New York Fed, should be considered an “academic exercise”. Nevertheless, for those with an interest in the long-term fortunes of the Australian and global economy, today’s speech may provide insight into the investment landscape of the not-too-distant future. Markets see inflation lower-for-longer: In the short-term, and regarding real-world phenomena: markets are demonstrating little faith inflation will return to target anytime soon. It’s an issue that applies equally to Australia, as it does to other developed economies across the globe. Here in Australia, market measures of future inflation imply that CPI ought to remain well below the RBA’s 2-3 per cent target-band. That’s contributed to the market pricing in a rate by November. If the status quo doesn’t change, and assuming those indicators are accurate, that means an environment where rates are lower-for-longer. That spells ill for the Australian Dollar, and probably keeps liquidity flowing into stocks, so long as earnings growth remains. ECB meets tonight: Monetary policy takes on real-world significance in Europe, as the European Central Bank meets tonight. It’s become clearer recently that, in line with central banks across the world, the ECB will need to boost monetary stimulus in the Eurozone, to combat a looming economic slowdown. Not only that, but in the brutal, beggar-thy-neighbour world of global monetary policy, not making such a shift would put Europe at the back of the pack in the global race-to-the-bottom to cut interest rates. As it stands, markets are betting that the ECB will implement two 10-point rate cuts before the end of the year, and probably announce a fresh round of quantitative easing, in time. ECB likely to inspire market movement: As far as this meeting goes, the outlook is a little more split. The balance of opinion points to a hold decision from the ECB. Interest rate futures suggests a 60% chance of that outcome; versus, naturally, a 40% chance of a cut. It opens up plenty of room for heightened volatility in financial markets around this event – especially in the Euro. The shared currency has been range-trading for a matter of weeks, on remarkably low volatility in global foreign exchange markets. A rate cut would send the Euro plunging into the 1.11 handle – and perhaps further. While some sort of hawkish-hold decision could see the currency make another foray above 1.13. Written by Kyle Rodda-IG Australia
  15. A night of mixed trade: Overnight trade might be considered an elegant microcosm for the affairs of financial markets right now. The news flow shifted from mixed, to bearish, to bullish, then back to mixed again. The story began with a US Retail Sales data-beat, that cast doubts on the Fed’s need to cut interest rates. That doubt was compounded by more soft-ish bank earnings in the US. The mood then turned decidedly nervous on headlines US President Trump stated his willingness to increasing tariffs on China if he wanted. Before sentiment was salvaged by a speech from Fed Chair Jerome Powell during which he re-affirmed his openness to lowering rates. Risk-taking dulled in the market: The ultimate result on Wall Street being a slight play out of riskier assets and into safe-haven assets. The S&P500 receded from its all-time highs to fade back towards the key-psychological level of 3000. Long-term US rates climbed as markets priced-in a marginally better outlook for US consumption. That gave a boost to the US Dollar, which drove the AUD towards the 0.7000 level once again, and pushed gold prices back to the $US1400 mark. The lead sets up the Asian session for a soft-start, with SPI Futures suggesting the ASX200 ought to extend its three-days of declines and dip around 4-points at the open. ASX200 drifting lower: The ASX suffered from the same listlessness yesterday that had characterized the night prior’s trade on Wall Street. Somewhat like what was experienced last week: market participants remain effectively still and vigilant ahead of greater event risk at the back end of the week. A play into the safety of government bonds pushed long term interest rates down, with price action in stocks reflecting the difference in income-yield dynamics. The utilities sector climbed, while the Real Estate sector lead the sectoral map. Despite the fall in interest rates, the Australian Dollar remained well supported during the local session, primarily due to a climb in industrial commodities. RBA confirms it’s on standby: The minutes from the RBA’s most recent meeting were released during yesterday’s local session, and while they offered little disruption to market activity, they did provide insight into the current state-of-mind of the central bank. Global growth risks, and global central bankers’ policy re-actions to them, were greatly examined; as were the current drags on households and domestic consumption. But the key takeaway was this: the RBA will continue to cut interest rates “if needed” to stimulate the Australian economy, and support the ongoing process of absorbing the stubborn “spare capacity” in the labour market that’s currently undermining the outlook for domestic growth and inflation. The RBA’s clear canvas: The RBA seems to expect that this will be a relatively long and slow process. Such an attitude isn’t a surprise, by any means. Monetary policy is a slow burning fuel when it comes to stimulating the economy. Even still, the moderation, cautiousness and broadness in the RBA’s language betrayed an uncertainty not just in the economic outlook, but also the potential direction for monetary policy. It reaffirms an interesting dynamic whereby the RBA is standing guard for a potential deterioration in local and global economic fundamentals, amid a lingering sense of doubt about whether policymakers across the globe can extend this business-cycle. RBA ambiguity brings market opportunity: Market action around yesterday’s RBA Minutes reflected the ambiguity betrayed within the document. Market participants weren’t preparing for anything more; the RBA was only ever going to expound on what had already been communicated in its meeting press-release a fortnight ago. Further to that, all the benefits and impact to financial markets from the information received had all but been priced-in by this month’s actual cut. Moving forward, however, the open-endedness of the RBA’s present policy outlook raises the stakes for markets. The next cut, implied for December, could just as easily be brought-forward or deferred, setting up ample ground for volatility. Global inflation under the microscope: The global macro-theme to keep an eye on in the day ahead is inflation data. A skerrick of it was released yesterday, after New Zealand inflation CPI met expectations, but re-affirmed the need for rate cuts from the RBNZ. It’ll be Canada and the UK’s turn this evening, with each of those economy’s rate outlook in focus. Inflation for both countries is expected to be sluggish – following the disinflation trend brought about by a slowing global economy. If the data inflation misses today, it adds the Bank of England and Bank of Canada to the list of central banks that may need to ease rates soon. Written by Kyle Rodda-IG Australia
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