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Analysts at Rabobank portray the shift in market sentiment and the major drivers off-late. The bank’s report cite US-China trade tension, protests in Hong Kong and the United States (US) relief to China’s Huawei as major catalysts, not to forget the meeting between the Federal Reserve (Fed) Chairman, the US President Trump and the Trade Secretary Steve Mnuchin. Additionally, the internal crisis in Iran also gained space in the bank’s report.

Key quotes

“Mood is Beijing about trade deal is pessimistic, government source tells me. China troubled after Trump said no tariff rollback. (China thought both had agreed in principle.) Strategy now to talk but wait due to impeachment, US election. Also prioritize China economic support.”

“The US has agreed to extend permission for its firms to export to China’s tech giant Huawei for another 90 days. However, even that comes ahead of a vote this week at the US FCC to decide if Huawei and ZTE should be officially designated as “national security risks”, which given the constant US effort to prevent its allies from adopting Huawei’s 5G, looks like a fairly predictable decision. Huawei is, of course, a red line for China in many respects.”

“China’s constitution and the Basic Law jointly form the constitutional foundation of Hong Kong.  Whether Hong Kong’s legislation is consistent with the Basic Law can only be judged and decided by the National People’s Congress standing committee. No other parties can judge or decide.”

Iran’s closure of its internet continues in response to a major revolt after the removal of fuel subsidies that looks straight out of the Lebanon or Chile playbook.  

“In terms of markets, we saw  Trump sit down with Fed Chair Powell. For once he didn’t cross any red lines, such as shouting “Where are my negative rates, you nincompoop!”

“The RBA has also released its latest minutes, which state the Reserve Bank expects wage growth to stay around the recent rate going forwards – so disappointing.”

“It’s another uninspiring day in terms of key data, with just US housing starts and building permits. Will that be enough to move key lines into the red or into the green?”