Tensions are rising in Hong Kong and the clashes between protestors and police are circulating around the globe, and that has chipped away at investor confidence in The West.
The protests have been going on for months now, and things are getting worse, and all flights were cancelled out of the international airport today as demonstrators occupied the airport. On mainland China, military personal and armoured vehicles were on display, and this added to the concerns that tensions are heating up. The escalation of tensions in the former British territory does not project a positive image for the financial hub, and funds are likely to flow out of the region.
China is also in focus on account of the strained trading relations with the US, and Goldman Sachs now predicts that a trade deal will not be struck between the sides before the US presidential election in 2020. Negotiations are planned for next month, but at the back end of last week, President Trump hinted they might not go ahead, but that is possibly just a ploy.
The FTSEMIB is slightly in the red as traders are fearful that Italy will be holding a general election in the coming months. Last week, Matteo Salvini, the joint Deputy Prime Minister filed a vote of no confidence in the country’s leaders, and it is a possibility the voters will be going to the polls in the coming months.
Tullow Oil shares have soared today after the group confirmed it has positive prospects for a well in Guyana. The find could exceed the predictions of 100 million barrels of oil, and that has sent the stock price soaring. Tullow will ‘evaluate the data from the Jethro discovery’, and the firm will carry out a second drilling in the near-term, and additional exploration work is in pipeline.
Thomas Cook confirmed it was seeking another £150 million from shareholders, and this comes after the group already was seeking to raise £750 million form Fosun in exchange for its tour business. The company can’t seem to get a handle of its finances, and the timing isn’t great given that some people are curtailing non-essential expenditure such as travel. Traders are likely to remain wary of the stock until the group’s capital position appears to be firmed up.
Sirius Minerals shares have tumbled today, and negative sentiment has been hanging over the stock since last Monday, when the group postponed a bond issuance. The group needs to raise funds in order to gain access to a credit facility, which is essential to the construction and completion of its Yorkshire mine. Sirius said it would wait until the wider sentiment has turned before tapping the market, but they are being held captive by the wider negative sentiment.
The S&P 500 and the NASDAQ 100 are in the red as global equity sentiment is negative. A mixture of the trade standoff with China, and the tense political situation in Hong Kong has promoted traders in the US to trim their equity positions. The absence of any major economic announcements left traders looking at the international headlines, and they aren’t particularly encouraging. It is possible that President Trump will use the Hong Kong situation against Beijing when it comes to negotiations. In terms of citizens and capital, the US has a lot invested in the business hub, and violent scenes have added to the wider downbeat sentiment.
Tyson Foods shares are in the red after the group incurred a fire at a processing plant in Kansas. The group confirmed the incident caused significant damage to the plant and it doesn’t know how long it will be out of operation.
It has been a quiet day on the currency markets as a lack of major economic reports brought about low volatility. The US dollar index slipped as there is continued speculation the Fed will cut rates next month even though they lowered rates last month. EUR/USD and GBP/USD have been assisted by the dip in the greenback, but both still remain it their wider downtrends.
Gold has yet again benefitted from the flight-to-quality effect as traders exit the equity markets and pour money into the precious metal. The commodity’s bullish run continues and given the wider macroeconomic outlook appears to be weak, the metal is likely to be in demand in the near-term.
WTI and Brent crude are holding up alright in the face of concerns about the state of the global economy. The energy market is often a good gauge of how strong the global economy is, it has endured losses recently, but in the latter half of last week, Saudi Arabia called on other OPEC members to cut production to support the oil market, and we are seeing a continuation to that positive move today.