Donald “Trumped” By Hillary

Daily Analysis - 27/09/2016

Global Financial Markets Give Clinton the Edge

Reactions from global financial markets seem to hand Hillary Clinton the edge in her clash with Republican opponent Donald Trump in the first of three US presidential debates held Monday night.

Risk Assets Rebound On Debate Results

US stock index futures rebounded from earlier session lows to turn positive as the debate kicked off. By the time the debate ended, futures were trading near the highs for the day, with Dow futures adding close to 100 points. Another credible real time indicator, Google Trends, swung in favour of the former secretary of state as the debate progressed. Google said that post the debate, Clinton was more searched than Trump in every state in the US. The Mexican peso gained ground against the US dollar after being the currency worst hit by Trump’s ascent in polls amid concerns that a win for the real estate tycoon will likely lead to decreased trade between the two countries. The currency hit all-time lows against the USD as Trump gained momentum in polls, only to rally during and after the debate.

Trump Accuses Fed of Politicising Rates

Donald Trump renewed his attack on US Federal Reserve Chairwoman Janet Yellen, accusing her and the Central Bank of politicising interest rates by opting to keep it unchanged. Trump also warned during the course of the presidential debate that the US economy was in a bubble and a stock market crash looked imminent as borrowing costs rise. Trump’s concerns are shared by some members at the Fed, who have publicly voiced their disapproval of the recent decision to hold rates steady, saying the current policy stance could create dangerous asset bubbles and destabilise the entire financial system. However, at this point, no action is anticipated before December, with Fed Funds futures currently pricing in a 44.40% chance of rates rising by 25 basis points. Silver fell after the debate despite the dollar selloff against certain peers.

Chinese Industrial Profits Soar

Profits earned by Chinese industrial firms grew last month at the fastest rate in three years, propped up by improving sales and lower costs. Industrial profits soared 19.50% in August to CNY 535 billion ($80 billion) according to the Chinese National Bureau of Statistics. This was the fastest monthly pace since August of 2013. Manufacturing profits jumped 14.00% from a year ago. By contrast, net income for mining firms tumbled 71.00%. The world's second largest economy has recently been showing signs of stabilisation, helped by rising government spending and a booming housing sector. The latest data provides fresh clues of a recovery, which has so far been patchy at best, with sectors such as iron and steel still burdened by excess capacity. In related economic news, the Asian Development Bank, in report released Tuesday, raised this year’s growth forecast for China to 6.60% from 6.50%.

Oil Down as Traders Await US Inventories Data

Crude oil futures fell in Asian trade as investors booked profits after the strong 3.00% gain in the previous session. Brent futures slipped 0.80% to $46.95 a barrel while US West Texas Intermediate crude fell 0.60% to $45.64 a barrel, after rallying 3.30% during the prior session. The mood has turned cautious ahead of weekly stockpiles reports from the American Petroleum Institute due later in the session. Official US Energy Information Administration figures are scheduled for release on Wednesday. Reuters’ poll of oil analysts showed US crude stocks likely rose by 2.800 million barrels to 507.500 million barrels during the week ended September 23, countering three weeks of unexpected declines. With the crude oil rig count continuing to rise, production might soon be on the climb as well, helping grow onshore US stockpiles and keeping the market oversupplied.