Riskier Assets Trade Under Pressure Following Iran Sanctions Infraction

Riskier Assets Trade Under Pressure Following Iran Sanctions Infraction

06 Dec 2018

US equity and bond markets reopen on Thursday following Wednesday’s mandated holiday to celebrate and mourn the passing of former President George HW Bush. While futures prices on Wednesday morning were higher than is not the case on Thursday as the arrest of Huawei’s CFO in Canada put a dark cloud over the futures market. She now faces extradition to the US despite China demanding her immediate release.

Riskier Asset are Trading Under Pressure

The US and Chinese relations are likely to deteriorate after the arrest of Huawei’s CFO in Canada over violations of US sanction with Iran. China has demanded immediately release while the US is looking for extradition. This comes as a very delicate time as both China and the US are attempting to spin their the Trump Xi meeting in Argentina their way. This situation is likely to intensify and force China to take a more aggressive approach with the US on trade.

It appears that UK Prime Minister Teressa May is discussing concession to win over those in her own party that are opposed to her Brexit deal. According to press report May has asked Julian Smith her Chip voting Whip to negotiate a deal. The planned solution might include giving Parliament veto power over the Irish issue which would seem to be a deal breaker.  The underlying problem is that the EU has stated this is the final deal so there is not wiggle room. Since parliament cannot amend the deal this compromise seems to be a non-starter.

Australian Trade was Narrower than Expected

Australia reported retail sales and trade figures on Thursday following Wednesday’s softer than expected GDP report which put the Australian dollar on its heels.  The trade surplus was narrow than expected at AUD2.3 billion, while sale came in right at the consensus 0.3% month over month.  On Wednesday Australian reported that GDP data came in much weaker than expected, showing growth is decelerating.  Growth slowed to 2.8% year over year from a revised 3.1% which was revised down from 3.4% in Q2.  Consensus was 3.3%. 

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