3 Things to Look for in December
3
Things to Look for in December
It’s
year-end season again and we’ll be marching into another New Year. The last
eleven months have been challenging as we walked through BREXT impact,
U.S.-China trade war, UAE- Qatar dispute, oil prices see-saw trend, European
recession etc.
Advancing
into a more turbulent year in 2019, the propelling forces that will keep us
thriving forward is the much coveted profits to be bagged from the market
whipsaw. Before we sum up the year, December might be an important month to
observe some signals for the coming movement in January. As usual, we foresee there
will be low market participation after the 20th day of the month due
to the long holiday seasons. However, be patient to harvest your gains in
January if you have ploughed some homework this month by observing the three
events below.
In
early December, the G20 nations will hold their bi-annual meeting in Argentina.
President Trump has voiced that the U.S. Government will impose new import
tariffs on Chinese goods if no deal is reached with Chinese leader.
Strategically, Trump is hoaxing and trying to intimate China’s President Xi to
talk and succumb to an unfair trade deal during the G20 meeting that will help
to cut the U.S. trade deficits. Of course, the proposal is obviously forcing
China to shift the wealth to U.S. Government by adjusting the Yuan value and
increase imports American goods!
No
one knows if the two leaders will shake hands to make a fudged deal or walk
away from each other. Since U.S. started the trade war in April, China has retaliated
by halted the import of U.S. oil from August. If no deal is made in this G20
meeting, commodity prices will pose erratic instability in January after the
holiday seasons.
On
6 December, OPEC is going to meet in Vienna HQ for discussing curtail of oil production.
OPEC has always favoured higher oil prices for enhancing their revenues.
Ironically, the murder of reporter Khashoggi in Turkey has sowed a discord
between U.S. and Saudi for a while, which Trump has clarified later of his
preference to be allied nation and his stance to forego the investigation on
the Saudi’s royalties linked to the murder.
Since
the last U.S. rate hike in September, Trump has reiterated many times of his
favour to cap oil at low prices. In recent statement, he defended that Saudi
will spur the oil prices to the rooftop if U.S. damages the relationship for pursuing
Khashoggi’s death and thus loses the grip on Saudi’s oil policy.
Finally,
the last FOMC meeting in 2018 will fall on 20 December (Asia date). We reckon
the policymakers will most likely tighten another 25 bp in FED fund rate for the 9th time since 2015. Effectively,
market traders will start going for their year-end break with not much reaction
aftermath. We expect the market reaction will start only in January!
After
the long holiday over the year-end, we would be able to see the market effect
from the above 3 fundamentals. In summary, we might see a flat oil prices with
small recovery while major stock indexes will create whiplash trends. Soft
commodity and grains may be suppressed by low demand. Putting all markets
aside, what could be viewed as safe haven for the traders will be Gold
instrument as a hedge against high risk assets!
Do
some homework as you enjoy the year-end holiday. The market may pay you off some
pocket monies to spend in Chinese New Year. Be prudent and always stay abreast
of market rout. Have fun trading.
~
DAR Wong is a veteran in global financial markets based in Singapore. The
opinions are solely at his own. He can be reached at dar@pwforex.com
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