NEWS TICKER August 23rd: The overarching theme of this week will inevitably be geopolitics as US/South Korean military exercises and a new ‘strategic’ approach to troop deployments in Afghanistan take some of the heat out of last week’s fever over the US president’s inflammatory remarks over the Charlottesville rally.
However, given this backdrop, this is now an important week in the Trump presidency; more so perhaps than last week as new geostrategic and financial imperatives mount for the US. Important negotiations over US debt levels, tax reform, and the government budget, among a growing list of legislative imperatives are now imminent as senators and congressman slowly seep back into Washington. Moreover, the heavily nuanced and tricky diplomacy required to absorb and accommodate even relatively small shifts in the power balance in the Asia-Pacific region that could impact relations with global peers (Russia and China) and the safety of two important US allies (South Korea and Japan) require calm heads and a significant upgrade in the quality of decisions and statements emanating from the White House. President Trump is expected to make a speech to the nation this evening outlining his thoughts. An interesting week ahead. Red was the predominant colour in Asian index benchmark charts following the Asian session today. Henry Croft, analyst at Accendo Markets noted, “Asian markets [traded] predominantly lower as tensions in the Korean peninsula dampen wider risk sentiment, while corporate results in Hong Kong [helped] its Hang Seng index to outperform in the region. Japan’s Nikkei and Australia’s ASX are both 0.4% lower, with poorly received results for Bluescope Steel (-20%) weighing on the latter.” Unless tensions are diffused quickly, it is unlikely to be a great week for stock markets wherever they may be. Real estate investment trusts gained slightly today the Tawadul (Saudi Arabia's), a day before the listing of a new trust, but as elsewhere bourses in the region were generally sluggish, especially Qatar. Geopolitical considerations aside, investors will also be eyeing key events later this week, including the US Federal Reserve’s annual symposium at Jackson Hole taking place over the course of three days from Thursday onwards. In other bellwether markets, crude iil has maintained Friday’s gains after widespread short covering on Friday prompted a sharp move higher. Brent crude has held above $52.50 while its US counterpart trades just shy of $48.50. Oil prices were steady early on Monday morning, searching for a catalyst for direction while OPEC is holding a meeting of its Joint OPEC-Non-OPEC Technical Committee (JTC) today in Vienna, which monitors the cartel and friends’ compliance with the output cuts. In its latest Monthly Oil Market Report, OPEC said oil output was up by 172,600 bp/d in July over June, to touch 32.8m barrels, pushed up by increased output from Libya, Nigeria, and Saudi Arabia. Elsewhere, gold ticked higher overnight after falling to $1280, its lowest level since Wednesday’s sharp rally following the Barcelona terror attacks. In some good news for investors this week, according to Janus Henderson, global dividends look to have touched an all-time high in Q2, on the back of a 5.4% annual increase. The asset management firm raised its forecast for dividend payments to a record $1.028trn, up by $50bn on its January forecast. Dividend payments rose in almost every country, excepting the UK, due to last year’s currency devaluation reports the firm -