Market Brief Optimism Over Potential Brexit and USChina Deals Rules the Day

Market Brief: Optimism Over Potential Brexit and US-China Deals Rules the Day

Risk assets rallied today on hopes for a deal on both Brexit and US-China trade. UK PM Johnson had a “positive and promising” meeting with Irish PM Varadkar, stoking optimism that the UK and EU will be able to reach a deal next week (prediction markets remain skeptical).
Separately, reports suggested there was a chance of a partial trade deal around agricultural purchases and currency levels between the US-China. While it would be far from the “big”, all-encompassing deal that President Trump has expressed a desire for, any progress would be better than traders expected earlier this week.
FX: The pound was by far the strongest major currency on the day, rising by more than 1.5% against its major rivals. The yen was the weakest major currency in risk-off trade.
US data: In another sign of a potentially slowing economy, US CPI came in at +1.7% y/y, below the 1.8% reading expected. Core CPI (ex food and energy) came in at 2.4% y/y as expected. That said, initial jobless claims dropped to 210k vs. 219k expected and previous, as the US labor market remains an economic bright spot.
Commodities: Gold dropped -1% on the day on declining safe haven demand, while oil tacked on more 2% today.

US indices closed higher on the day, though off their highest levels.
Energy (XLE) was the strongest sector on the day, boosted by the big rally in oil prices. Utilities (XLU) were the weakest.
Stocks on the move:
- Utility PG&E (PCG) dumped -29% after a judge ruled to allow bondholders to push for the company’s bankruptcy.
- Delta Airlines (DAL) dropped -2% after issuing weaker-than-expected guidance for next quarter.
- Ra Pharmaceuticals (RARX) exploded 101% higher after Belgian pharmaceutical company UCB agreed to acquire the company for $2.5B.
- Kroger (KR) shed -3% after an analyst at Jefferies criticized the grocer’s investment in Ocado.
- Retailer Bed, Bath, and Beyond (BBBY) rocketed 21% higher after announcing former Target executive Mark Tritton as CEO.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.