As expectations continue to increase on a Federal Reserve rate cut, investors have begun selling off their bank stocks with Bank of America being the hardest hit. Banks rate-sensitive deposits have been the quickest for the investors to dispose of. The DJIA, NASDAQ and S&P 500 all shed 0.05%, 0.01% and 0.04% yesterday, while the yield on US 10-YR also dropped to 2.124% at close of market yesterday and the USD INDEX parked at 96.65.
Labor plans a cross party move to stop Britain leaving the EU without a deal, in what some view as a bid to put a dent in the plans of Boris Johnson; who is expected to announce his intention to complete Brexit with a deal or no deal by October 31. The LP is set to thwart pledges by Johnson and other Tory leadership contenders if they fail to renegotiate the withdrawal agreement. The FTSE shed 0.5% at market close yesterday while the pound was exchanging for 1.2728 with the US Dollar a 0.04% slide from previous day. The yield on UK 10-YR was flat at 0.834%.
A consortium of big banks in the European Union have raised warning signals that over 30% of online payments will be lost from September based on some of the requirements in the new anti-fraud rules; which is aimed at combating the rate of fraud and introducing extra levels of security. They are calling on the regulator to afford more time to adapt to these policy changes. In the financial marketplace, the DAX. STOXX600 and CAC all lost value by 0.26%, 0.40% and 0.45% respectively, the Euro on the other hand gained 0.04% to reach 1.1333 benchmarked against the greenback at market opening today.
ASIA PACIFIC & CHINA
Equities on Hong Kong bourse dropped as demonstrators today blocked access to the legislature in a protest of the proposed extradition bill which has been met by resentment by Hong Kong. The Hang Seng Index (HSI) fell by 1.7% There are fears over the extradition bill which would allow Chinese offenders who are in Hong Kong to be extradited to China to face the law. The fears are rooted the opaque legal system in China and concerns are that this bill would be misused to support other political or commercial interests.
On Asia Pacific bourses; the ASX200, NIKKEI and KOSPI all shed 0.04%, 0.35% and 0.14% respectively while the New Zealand Dollar was trading for 0.6579 against the United States Dollar representing a slight 0.03% dip.
Turkey’s central bank may cut rates following on from the lead of major central banks in India and Australia as well as signs that the ECB and Federal Reserve are sounding more open to stimulus. Groundwork appears to have already been laid with the bank adopting a softer stance by removing a commitment to tighten monetary policy in April. With the lira having gained 6% against the dollar since May 9, policymakers may be prompted to cut interest rates today especially as a slowdown in inflation has taken root. While analysts largely think that the rate will remain for a sixth straight meeting, Credit Suisse calculations show rate markets are pricing in a 1% cut with a probability of 20% or a 10% chance that the benchmark will be 200bps lower. The lira was weaker against the dollar at 5.7975 while TURKEY 47s traded lower at 79.580.
Paraguay’s growth continues to impress in the region, with an average growth rate of 4.5% over the past 15 years. The Latin American economy rode the wave of the commodities boom increasing income from exports of soya and beef to drive this inclusive growth. The finance minister has earmarked investment on the back of a reformation of critical areas of the economy can be the catalyst to continue to drive growth. In the markets the MERVAL gained 5.02% to price at 38283.25, while the CARACAS shed 1.28% by close of business on Tuesday. On currency, the BRL was trading for 0.2593 against the USD and the yield on MEX 10-YR was unchanged at 7.71%
The head of the Finance Ministry’s debt department Konstantin Vyshkovsky said Russia will only issue more Eurobonds this year if it can improve upon the results of the March offering. In March, $3 billion was raised in a new dollar-denominated bond and €750 million euros in a top-up issue of an existing euro-denominated bond. This follows remarks by the Finance Minister Anton Siluanov that market conditions “aren’t bad” and they were considering issuing another bond. The ruble closed stronger at 64.5553 to the dollar while RUSSIA 47s closed lower at 107.835.
Nigeria has announced that it would gradually unwind the peg on the official rate to allow a market-determined rate. According to Yewande Sadiku, head of the Nigerian Investment Promotion Commission, the Central Bank is in talks with other agencies to move to a single rate for the nation’s currency. This move would be welcomed by investors who have complained about the system of multiple exchange rates and the peg. The South African Rand was trading for 0.0680 against the greenback at the open of markets, while the yield on GHANA 10-YR was 7.811% as at market close yesterday.