Argentina defaulted on its sovereign debt for second time

Thursday, July 31, 2014

Asian equity markets traded fairly mixed overnight, tracking general mixed sentiment from the Wall Street. The Hang Seng Index extended gains, continuing its 8-day upside rally, and hit a high at 24,893.  The Nikkei held above 15,600, falling slightly by 0.15%.

Hang Seng Index rallies for 8th consecutive session

HSI Index (Hong Kong Hang Seng I 2014-07-31 08-52-27

There were no big surprises with the US Fed policy decision following a further US$10 bln tapering of bond purchases to reach US$25 bln per month. The FOMC statement did make references to the US economy being stronger, reporting though a dovish tone about the labour market. The US dollar continued its strong rally, but gains were limited after the FOMC statement.

USD Index

DXY Curncy (DOLLAR INDEX SPOT)  2014-07-31 08-53-22

Argentina defaulted on its sovereign debt for the second time in 13 years on Wednesday, as serious last-minute talks between the country’s government and holdout creditors failed to come to an agreement.

This morning, European equity markets posted modest gains in early trading. German retail sales rose sharply by 1.3% beating analysts’ expectations, while Germany’s unemployment rate remained unchanged at 4% in June. In the UK, Nationwide house prices rose by 10.6% y/y in July, missing expectations of a 11.3% rise, while GfK consumer confidence was reported at -2 in July against estimates for a positive +2. Sterling traded around 1.69, holding within the recent range.

Energy: Brent front month futures plunged yesterday and ended the session at $106.50 on Wednesday, as dovish comments from the US Fed weighed on market sentiment. This morning, Brent futures extended losses and breached below $106 per barrel in early trading. The oil market seems to be on a exhaustion phase, overreacting to any negative news or data. The weekly EIA oil inventories failed to provide some support despite showing a large decline of nearly 4.0 million barrels in crude stocks.

Brent futures under heavy pressure

CO1 Comdty (Generic 1st 'CO' Fut 2014-07-31 08-53-56

 

Events for today:

 

0755

DE

Jul

Unemployment Rate

1000

EZ

Jul

Inflation Flash

1000

EZ

Jun

Unemployment Rate

1230

US

Jul

Challenger Layoffs

1330

US

w/e

Jobless Claims

1330

US

Q2

Employment

 

All times UK Local Time

 

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