Opening Bell: Stocks Fall Ahead Of Trade Talks, Tech Earnings; Bonds, Yen Up
Investing.com | Jan 28, 2019 08:09
- U.S. futures, European shares drop ahead of tech earnings, U.S.-China talks
- Yen, Treasurys climb on broad investor defensiveness
- Gold sees gains; dollar wavers h2 Key Events/h2
- Chinese President Xi Jinping’s top economic adviser, Vice Premier Liu He, will meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Wednesday and Thursday.
- Apple is expected to report earnings on Tuesday after market, with a $4.17 EPS forecast, after posting $3.89 for the same quarter last year.
- Microsoft is scheduled to release earnings results on Wednesday after market, with upbeat predictions of $1.09 EPS, up from last year’s $0.96 EPS for the corresponding quarter.
- Facebook is due to report corporate results on Wednesday after market, with a $2.17 EPS expectations, from the $2.2 the same quarter last year.
- Qualcomm (NASDAQ:QCOM) (NASDAQ:earnings on Wednesday after market, with a $0.91 EPS prediction, from last year’s $0.85.
- Tesla (NASDAQ:earnings on Wednesday after market with a $1 EPS forecast, from $-3.84 the same quarter last year.
- The U.K. Parliament votes on amendments to Theresa May’s Brexit bill on Tuesday. The EU Parliament debates Brexit on Wednesday.
- Also on Wednesday, Fed Chairman Jerome Powell holds a news conference after the FOMC rate decision.
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Canadian GDP for November is released Thursday.
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Canadian IPPI for December is released Thursday.
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Canadian RMPI for December is released Thursday.
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Canada’s S&P/TSX Composite closed up 0.56 percent last Friday.
- Futures on the S&P 500 fell 0.4 percent.
- The STOXX 600 dropped 0.3 percent.
- The MSCI Asia Pacific Index slipped 0.2 percent.
- The MSCI Emerging Market Index slid 0.1 percent.
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The Canadian loonie was down 0.12 percent against the U.S. greenback early Monday, trading at 0.7555.
- The U.S. Dollar Index is flat after fluctuating between more than 0.1 percent in either direction.
- The euro lost 0.1 percent to $1.1397.
- The British pound edged 0.3 percent lower to $1.3163, the largest fall in more than a week.
- The Japanese yen gained 0.1 percent to 109.46 per dollar.
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Canada’s 10-year yield was up early Monday at 1.988, a 0.56-percent increase.
- The yield on 10-year Treasuries declined one basis point to 2.75 percent.
- Germany’s 10-year yield gained one basis point to 0.20 percent.
- Britain’s 10-year yield was unchanged at 1.317 percent.
- West Texas Intermediate crude fell 1.7 percent to $52.80 a barrel.
Futures on the FB ). Big tech firms have strongly impacted the recent market performance, making this week's reports a potential catalyst.
While in recent years seemingly limitless returns helped big tech names win investors' favor, current economic, market and political conditions make trust hard to come by.
Last quarter’s warning of falling profits aired by numerous Wall Street companies struck a chord with investors. Although, General Motors (NYSE:GM) (NYSE:list of risk factors to include the possibility of a “recession or slowing growth."
If ever there was a time when continued soft guidance and doom-and-gloom economic forecasts could prompt stock prices to fall hard, it would be now: the post-Christmas bounce has stopped at a technical convergence .
Meanwhile, European shares also opened lower this morning and then slipped further ahead of a crucial round of U.S.-China trade negotiations—starting in Washington on Wednesday—as the outlook for a resolution remains cloudy.
Investors tried to gauge whether the retrenchment seen on the STOXX 600 today marked just a temporary pause or a reversal—a legitimate doubt, considering the price is at a trend intersection. It gapped up Friday above a downtrend line since November 8, only to gap down today. The emerging picture is an evening star pattern, with the downtrend line making it all the more poignant, as investors up the ante on both sides of the supply-demand equation.
Earlier, during the Asian session, most stocks ended a choppy session lower. At first, regional shares followed Wall Street stocks higher as investor optimism was boosted by the interim agreement reached by lawmakers to reopen the U.S. government. However, later in the session the focus shifted to looming U.S.-China trade talks, prompting investors to take on a more defensive stance.
While Hong Kong’s Shanghai Composite lost 0.18 percent. If investors expected this week's meeting to yield a diplomatic breakthrough, they would have bought what would be considered very cheap stocks, which since the start of the trade war have lost more than a quarter of their value.
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U.S. Treasury Secretary Steven Mnuchin, who has openly criticized the yuan 's weakness in the past, said high-level talks this week will include discussions about China's currency policy—we have written extensively about the yuan’s weakening during the recent U.S.-Sino trade talks. In recent days, however, positive sentiment toward the negotiations has lifted the value of the renminbi against the dollar. Today though the USD/CNY pair appears to have found support, as the price rebounded from an early plunge to the previous trough from two weeks ago, forming a hammer.
Meanwhile, Japan's Nikkei 225 dropped 0.60 percent, underperforming its peers. The index met with overwhelming supply upon a second attempt in a week to contend with the 21,000 level, where the downtrend line since October 2 meets with a previous support from October 26 till December 19, constructing a descending channel. The pattern projects supply outpacing demand.
South Korea's KOSPI was largely flat while Australian markets were closed for holiday.
h2 Global Financial Affairs/h2Facing mounting political pressure, U.S. President Donald Trump agreed to temporarily end a 35-day-old partial government shutdown on Friday, despite failing to obtain the $5.7 billion funds he had demanded from Congress for a border wall with Mexico.
Typical risk-off took hold of the market, with traders buying policy meeting . Perhaps, the greenback benefited from increased demand for Treasurys. Gold may also need a correction, after reaching a 7-month high, including a sudden acceleration in mid November. Both gold and the buck reversed their course today.
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