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US factory contraction, UK snap election to block Brexit delay

Hi Everybody,

Today will be my final instalment of the daily update before handing the reins back to Mati. It has been very enjoyable covering for the last few weeks and it’s now my turn for a holiday!

US equity markets fell yesterday as ISM manufacturing data came in weaker than expected. Factory activity data contracted for the first time in 3 years. Investors appeared concerned that the trade war between the US and China could push the US economy into recession. Gold and then Japanese Yen which are often considered to be ‘safe haven’ assets rallied, as did the US Dollar.

Link:   Bloomberg Article

Alternative view – JP Morgan says buy

According to JPMorgan & Co., adding risk back on is the right thing to do. Despite trade war concerns in the near term, the technical indicators and central banks’ monetary easing should outweigh the negative impact.

Link: Bloomberg Article

Brexit

UK Prime Minister Boris Johnson is expected to attempt to call a snap election today. This comes after a movement of opposition, including Conservative Party rebels, defeated the government with their motion to block a ‘no-deal’ Brexit and even force another 3 month extension to the deadline. Johnson, having vowed to take the UK out of the EU on the October 31 deadline, will argue that the country needs an election in order to proceed.

Link: Reuters

The day ahead

The key economic data for today is the services PMIs for August in Japan, China, and Europe. We should be on the lookout for July retail sales for the Eurozone, and in the US the July trade balance is due for release. The Bank of Canada’s interest rate decision and monetary policy statement is also due this afternoon.  A number of central bankers are scheduled to speak today. The ECB’s Lane is due to speak in London at 12.00 BST. This afternoon, Fed speakers will include Williams, Evans, Bowman, Bullard, and Kashkari. Bank of England Governor, Mark Carney is also due to speak at 14.00 BST.

Traditional markets

Goldman Sachs (GS)— Goldman Sachs dropped nearly 3% as news broke that the bank’s global co-head of securities, Marty Chavez is departing.

Goldman Sachs’ equity price is up trending in the weekly, daily and 4 hourly timeframes, creating higher highs and higher lows. The current price appears supported by 200 DMA at 196.00. The initial upside resistance is at 207.00 which is also the 50 DMA. A confirmed breakout above 207.00 could further support a bullish outlook targeting additional upside resistances at 213.40 followed by the 219.00 and 222.00. Alternatively, a confirmed loss of the current daily support at the 196.00 could change the outlook to bearish, targeting additional downside supports at 193.00 followed by 188.30 and 181.20.

Twitter (TWTR) – Twitter said the personal account of CEO Jack Dorsey is now secure after being hacked on Friday. The hacker used Dorsey’s account to send out tweets that contained racist messages.

Boeing (BA) – Boeing faces new delays in returning the 737 Max to service, according to The Wall Street Journal. International regulators are said to be upset over what they perceive as a lack of information from Boeing on its proposed software fixes for the grounded jet.

Spark Therapeutics (ONCE) – Spark and Switzerland’s Roche announced another extension of Roche’s $4.3 billion takeover bid for the US-based gene therapy company. The extension to October 1 was given to provide more time for regulatory reviews. Spark is a recent addition to the CRISPR-Tech CopyPortfolio on eToro.

Amazon.com (AMZN) – The stock’s price target was raised to $2,600 per share from $2,250 by RBC Capital Markets, which also reiterated its ‘outperform’ rating on the stock. The move reflects the expected positive impact of Amazon’s new Prime one-day shipping initiative.

Amazon’s share price is up trending in the daily timeframe, creating higher highs and higher lows. Key support to the downside is at 1740.00 which is the 200 DMA. The initial resistance on the upside is at 1840.00. A confirmed breakout above 1840.00 would appear to be bullish targeting additional upside resistances at 1869.00 followed by 1892.00 (50 DMA) and 1932.00. Alternatively, a confirmed loss of the current daily support at 11740.00 could support a bearish outlook targeting additional downside supports at 1716.00 followed by 1687.00 and 1668.00.

Snap (SNAP) – Snapchat’s parent’s shares were upgraded to outperform from in-line at Evercore, which is citing Snap’s move into gaming.

Marks & Spencer Group Plc (MKS.L) – The UK retail institution is set to be demoted from London’s benchmark FTSE 100 Index, ending a 35-year stay, according to indicative results from provider FTSE Russell that are due to be confirmed Wednesday. The company now has a market capitalization of just £3.7 billion ($4.5 billion), down from a peak of about £18 billion in 1997.

Barratt Developments (BDEV.L) – Despite posting an 8.9% rise in pre-tax profit, shares in the UK housebuilder are propping up the FTSE100 this morning, trading down 3%. Up until yesterday the company had enjoyed a near 35% rally this year but subdued guidance in the face of an uncertain Brexit has seen investors’ appetite cool.

Link: CNBC Article

Commodities – crude oil

Crude oil futures extended losses yesterday for the third consecutive session. Selling pressure intensified on rising OPEC production output and US-China trade negotiations impacted global economic growth. Investors’ sentiment appears negative based on the premise that the global economic slowdown could likely impact crude oil demand. Additionally, recent US Dollar strength makes USD denominated oil more expensive for foreign currency holders. From the supply-demand aspect, the Energy Information Administration (EIA) crude oil inventory data is normally due on Wednesdays at 15.30 BST. Due to the US Labour Day holiday on Monday, the weekly inventory data will be published on Thursday.

Oil is down-trending capped by the 20, 50 and 200 day moving averages and also the falling resistance trend line in daily timeframe.  The upside is initially capped by resistance at 55.80. Price action appears bearish below 55.80 potentially targeting additional downside supports at 52.20 followed by the 51.20 and 50.40-50.00. Alternatively a confirmed breakout above the 55.80 resistance could trigger the oversold bounce back, targeting additional resistances at 57.30 followed by the 58.80 and 60.00.

 Crypto

The German version of world-famous fast-food chain Burger King now accepts Bitcoin (BTC) payments in its delivery website and mobile application as reported by Cointelegraph.

Link: Cointelegraph Article

Companies offering virtual currency related services should be prepared for DNB regulation

The Dutch central bank (DNB) said in a statement that companies offering virtual currency-related services should report and be supervised under the fifth European Anti-Money Laundering Directive (AMLD5) and its related laws in the Netherlands. Companies that provide deposit services for crypto and fiat to crypto conversion are expected to be overseen by the central bank by January 10, 2020.

Link: Coin Desk

PwC Luxembourg to start accepting Bitcoin payments

‘Big 4’ auditor PwC has released a statement saying that they will begin accepting customer payments in Bitcoin from October 1, citing the need to support the growing crypto ecosystem in the country.

Link: PwC press release

All data, figures & charts are valid as of September 3rd. All trading carries risk. Only risk capital you can afford to lose

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