WASHINGTON, D.C. – The week ended positively as the US stock market rises amid the growing geopolitical risks.
Trade news continues to significantly affect the stock market overall, despite that no fixed details about the trade talks have come out during the week. The urgency to hammer out details on the US-China trade negotiations was also halted after the APEC meeting in Chile was canceled.
The on-again-off-again nature of comments about the trade talk from both the US and China has made the market wary throughout the week. The previous statement from the US President Trump in New York has deflated hopes early in the week. However, recent comments from the Commerce Secretary Wilbur Ross and economic adviser Larry Kudlow spiked up trade hopes and optimism that a trade deal is likely to be finalized soon.
For the last five trading days, USD declines, and GBP increased by 1% against the US dollar as UK election news starts, which is set for less than a month from now.
Between the US and Mexico, the rate cut did by Banxico, which was about 25 basis points, significantly affected the rate difference between the two countries. However, the low inflation pressures and the continually stagnant growth signifies more rate cuts for next year. The vote for the 25-points rate cut was unanimous, but two out of five board members voted for a rate cut of 50 basis points.
The same risks for Chile, Bolivia, and Argentina are low, but the growing trade concerns, mainly in the US-China trade wars and the USMCA, have taken their roll.
On the other hand, shootings, escalating violence, and the continued protests in Hong Kong raised conflicting sentiments for the Asian market. Based on data reported, the technical recession is confirmed for Hong Kong for the 3rd quarter, which is due tonight and is not expected to go upwards.
The USD/HKD pair had a break in October due to the weakness of the broad-based dollar, but it is reportedly going uptrend this week. However, the Hang Seng index is taking the heat as it goes downside, the first decline it has after seven weeks.
China equities also felt the burn of ongoing unrest in Hong Kong. The major focus is still on the US-China trade deal, and any more delay in finalizing phase one in trade talks will affect the China 50 index.
For next week, the market focus will center on European PMIs and central bank minutes. Monday will be for the AUD Money Policy Meeting, followed by the CAD CPI m/m and USD FOMC Meeting on Wednesday. Thursday will be for the hearings on GBP Monetary Policy Report and EUR ECB Monetary Policy Meeting, followed by EUR PMIs and CAD Core Retail Sales m/m on Friday.