Amplify Trading Global Markets Review - 3rd September 2019

Amplify Trading Global Markets Review - 3rd September 2019

Today's Highlights

  • UK PM warns rebel to back down or snap election on October 14

  • US ISM Manufacturing PMI point to the first contraction since January 2016

  • Results of M5S online poll over alliance with PD5 due to be release at 5 pm (SMT)

Macro Review

If you were looking for fresh topics of discussion you will realize that nothing new has really happened since the start of the year. In December 2018 equities sold-off due to fears of an escalation in US-China trade war while the FED was still hiking rates. The UK was facing an imminent deadline to negotiate a withdraw bill from the EU and Italy was run by a technical government made up of unrealistic coalitions. 8 Months later that , I can tell you that very little has changed. US-China trade war has escalated even further, the UK is facing a new imminent deadline and Italy is set to get a brand-new "hybrid" government. Since boxing day however Central Banks around the world have turned ultra-dovish and promised tons of liquidity to ensure the global economy against the ongoing manufacturing recession, linked to intensified global trade contraction and geopolitical tensions. Therefore, the world we live in 2019 is a world which very few foresaw before end of 2018 explaining the severe collapse in yields and buy-everything euphoria. However, markets work on forward expectations, thus the big question is how much of all these concerns have been priced in investors expectations and how much more will (can) central banks sustain consumer sentiment and growth. At this point it looks like there is not right or wrong as long as traders are confident that the liquidity in the system is of enough assurance against possible negative events. Hold my beer.

Today, the US Manufacturing PMI highlighted the first contraction in the sector since January 2016 - 49.1 vs exp 51.1. Confirming that the slowdown in manufacturing activity is also biting the US. ISM respondents expressed slightly more concerns about the US-China trade turbulence, with trade that remains the most significant issue, indicated by the strong contraction in the new export orders. However, market reaction was relatively choppy. Equities close in red, but seemed unresponsive to US numbers, which remains in better shape than the rest of the world economies and nonetheless cement expectations for another 25bbp in two weeks time

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