Fundamental Analysis

Month-to-month Market Outlook – September

September is a notoriously risky month for international markets, with Fairness markets particularly historically recording their worst efficiency of the yr. Will September 2019 be any totally different and what’s in retailer for the opposite key markets within the month forward?

CURRENCIES

Greenback: The Greenback weakened initially in August however the USDIndex traded to higher than two-year highs of 99.02 on the ultimate day of buying and selling to shut the month up. The Greenback’s yields benefit over the Euro and Yen particularly, together with easing central banks, have supported the Dollar of late, as has the relative outperformance of the US economic system. The Fed assembly (17-18) and sure charge reduce announcement would be the key occasion of the month. September begins with NFP on the sixth, CPI knowledge on the 12th, Retail Gross sales on the 13th, FOMC Fee Determination on the 18th, the ultimate studying for Q2 GDP (26th) and closes the month (27th) with Sturdy Items Orders and PCE knowledge.

Euro: EURUSD nose-dived to contemporary 27-month lows of 1.0963 and closed August at 1.0988, breaking 1.1027, the August 1 pattern low. With the Euro now by means of the important thing 1.1000 mark, comply with by means of promoting could also be on the playing cards going ahead. Essentially, the Euro stays in sell-the-rally mode, with gradual EU development (recession in Germany?), an ECB in stimulus mode, Italian political considerations, and Brexit uncertainties all set to conspire towards the EUR. The ECB Coverage Assertion and Press Convention is the headline occasion for September (12th), together with PMIs (23rd) and CPI (30th).

Sterling: Brexit uncertainty and a brand new PM continued to dominate the path of Sterling throughout August. Cable plunged in direction of 1.2015 firstly of the month, (28-month low August 11), recovered in direction of 1.2300 and closed the month at 1.2155. The UK Parliament resumed September 2 and with a brand new Normal election wanting the almost certainly consequence forward of the present October 31 Brexit deadline, will probably be one other huge month for Sterling. Financial knowledge releases and the BOE will once more play second fiddle to the continuing political saga that’s the Brexit course of, particularly if a brand new snap Normal Election is known as. The calendar has GDP (ninth) and CPI (18th), whereas headline day is September 19, with the BOE charge determination and Retail gross sales.

Yen: Not for the primary time within the final yr, the Japanese Yen was the foremost gainer through the commerce war-induced hiatus in international markets that ran all through August. USDJPY traded all the way down to 104.42 from highs of 109.28, however recovered into month finish to shut at 106.18. Financial knowledge once more underwhelmed, nevertheless Machine Items and GDP have been the important thing exceptions. Necessary dates for the approaching month are GDP (ninth) the BOJ Curiosity Fee announcement (19th) and launch of assembly minutes (25th).

Aussie: The Aussie moved down towards all crosses throughout August (AUDUSD traded under zero.6800 all month and closed the month at zero.6732), regardless of one other improved commerce steadiness and optimistic employment change. Australia’s publicity to the Chinese language economic system continues to be the primary driver. The housing sector particularly and weak inflation numbers stay areas of concern. Constructing Approvals in August fell by -9.7%, the worst on file. The RBA announcement was on the third, no change was confirmed after cuts earlier within the yr however the outlook might stays weak. Different key occasions are GDP (4th), RBA Minutes (17th) and Employment numbers (19th).

Loonie: The Loonie continued to say no towards the USD throughout August, USDCAD breaching and holding over 1.3300 to shut the month at 1.3310. This accomplished the seventh consecutive week of positive aspects from the summer season low in July at 1.3015. A weak jobs quantity and a greater than anticipated retail gross sales and inflation studying, and a beat for the GDP studying continued to supply blended messages for the BOC. The three key occasions for September are the BOC curiosity Fee announcement (4th) jobs numbers (sixth), CPI (18th) and Retail Gross sales (20th).

Rising: The Ruble traded under the 64 degree towards the Greenback at the beginning of month however faltered considerably into month finish as Oil costs fell and the USD gained floor, closing at 66.57. The ZAR additionally misplaced additional floor after a weak begin to the month; USDZAR rose from 14.3300 to over 15.0000 earlier than consolidating at highs by month 15.4000. The Turkish Lira moved up because the month began earlier than weakening considerably into month finish, from lows of 5.45. USDTRY rallied over 6.00 intra-day earlier than closing at 5.81.

COMMODITIES

Gold: Gold had a really robust August, up over $100 from $1413 to shut the month at $1523, and in addition breaching the $1550 degree intra-day. The escalating commerce conflict and international geopolitical tensions refused to ease. Assist now sits on the $1500-1460 zone with the general path biased to the upside. The central financial institution shift to questioning and slicing rates of interest ought to, in the long term, proceed to supply some help for the Gold worth.

Silver: The value of Silver additionally had a robust August and accomplished an Eight-week transfer to the upside from July lows below $15.00 to August and 33-month highs of $18.60, closing the month at $18.33. Weakening manufacturing PMIs proceed to scale back the economic demand for Silver and with out the protected haven demand that helps Gold, Silver has stunned considerably to the upside throughout August.

Oil: Oil costs remained risky in August, however continued to maneuver decrease. From an August 1 excessive at $57.98, the worth collapsed below $51.00, earlier than recovering to shut the month at $55.10. Costs are more likely to stay risky as demand and provide are nonetheless fairly unpredictable as US Oil inventories pivot from construct to drawdown situations from week to week. The state of affairs in Libya, the continuing disaster in Venezuela and the numerous US-Iran tensions help costs together with OPEC manufacturing cuts, nevertheless weakening international demand from the continuing commerce conflict and weakening international financial outlook constrain demand.

INDICES

US: The US markets (USA30, USA100, and USA500) have been all extraordinarily risky in August, down considerably from July’s all-time highs, solely to recuperate into month finish. Three consecutive weeks strikes decrease have been all retraced within the ultimate week. The escalation in rhetoric over the continuing commerce tensions with China and the blended messages from the White Home about September commerce talks and the implementation of tariffs for each side all weighed on equities. Because the Inventory Dealer’s Almanac 2019 stories, September being the ultimate month of the third quarter it’s historically the weakest performer of the whole yr. During the last twenty-one years, the USA30, USA100 and USA500 have all recorded common losses for September, with positive aspects within the first half evaporating within the second half and the ultimate week particularly.

Europe: Inventory markets in continental Europe moved in tandem with the US exchanges, because the GER30 and FRA40 skilled vital volatility with extra blended financial knowledge releases and weak PMI knowledge particularly. The UK100 additionally moved down throughout August, at the same time as Sterling declined and the Brexit disaster intensified. Losses have been over four.5% because the UK inventory markets’ exceptional resilience to all of the Brexit uncertainty was examined as soon as once more.

Japan: The JPY225 moved inversely to the Yen and was very risky, along side the general pattern in Europe and the US. The Japanese economic system has underperformed once more over the previous month with some weak knowledge factors, nevertheless the general financial outlook is enhancing as inflation continues to stay above zero and spending and loans development stay optimistic. As a serious exporting nation the Japanese macro setting must see a leisure of world commerce tensions and an easing within the power of the Yen, neither of which seem imminent.

EQUITY PICK OF THE MONTH – APPLE

September is all the time an fascinating month for APPLE shareholders as the corporate historically publicizes new merchandise and extra lately, providers to be launched and accessible for the essential This fall Christmas gross sales. This yr will likely be no totally different. Apple shares have moved with this yr’s know-how pack with highs posted in July over $220 and lows throughout August of $192, because the 50-day shifting common proved an essential help degree. September 10th is the launch occasion this yr with upgrades anticipated for a raft of merchandise from the iPhone (11), iPads and MacBook by means of to the Air Pods and Apple Watch (5). Nevertheless, there aren’t any new merchandise anticipated. Merely upgrades to the prevailing line up. design and performance have all the time been on the core of what Apple does and the massive transfer in recent times has been away from this dominance of (despite the fact that the iPhone nonetheless accounts for over 65% of revenues) to take a position considerably in providers. The preliminary transfer was a partnership in 2015 with IBM and Cisco to attempt to break within the company market; this has been adopted by Apple Pay and extra lately the lengthy awaited improve for Apple TV, TV Plus. Apple TV+ is outwardly scheduled for launch in November, initially solely within the USA at $9.99 monthly and enters a really crowded video-streaming market, presently dominated by Netflix, however together with Amazon and Disney. Apple Companies is a rising income stream throughout the know-how big and TV+ marks its newest try and diversify its dependence from the ever present iPhone. Apple stories This fall earnings for the tip of September on October 29 and present expectations are for revenues to prime $62.55 billion and EPS to prime $2.80.

CRYPTOS

Bitcoin had one other risky month, closing at across the $9500 mark, after buying and selling over $10,00zero for many of the month following a rally as much as $12,300 through the first week of August. The psychological $10,00zero stays key. Ethereum tracked Bitcoin decrease in August and breached the 200-day shifting common buying and selling as little as $165.00 into the shut of the month, representing a $70.00 (24%) decline for August. Ripple’s worth additionally wakened throughout August to publish new 2019 intra-day lows at zero.2280, earlier than closing the month at zero.2460, a brand new finish of day 2019 low.

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Stuart Cowell

Head Market Analyst

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