Opening Bell: Stocks, Oil Bounce As Trump Softens After China Toughens
Investing.com | May 14, 2019 09:25
- U.S. futures rebound on Trump's reassurance on trade
- Automakers lead Europe's rally
- U.S. stocks, agricultural commodities tumble on China's retaliatory tariffs
- WTI bounces back amid trade jitters, Middle East tensions h2 Key Events/h2
- There's a lot at stake for the Chinese e-commerce giant if heightened U.S.-China trade tensions lead to severe weakening of consumer demand.
- face close scrutiny after slowing sales have recently hit its stock price.
- A slew of Federal Reserve policymakers will speak this week: Boston Fed President Eric Barkin also make appearances.
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Canadian CPI and Core CPI are released on Wednesday.
- Japan balance of payments is due on Tuesday.
- China retail sales are out on Wednesday.
- U.S. industrial production also also scheduled for Wednesday.
- Bank of Indonesia holds an interest rate meeting on Thursday.
- Australian unemployment is out on Thursday.
Futures on the forecasted trade negotiations will be “very successful."
STOXX 600 Daily Chart
Europe's STOXX 600 also benefited from reassurance on the trade front, with carmakers, particularly exposed to tariffs uncertainty, leading the gains.
In the earlier Asian session, Hong Kong’s increases the odds of a global economic slowdown. Even if they’re wrong, a meltdown of financial markets would in itself prompt that outcome.
While we have been bearish in the medium term since early December, we would advise against being overly pessimistic over what has proved to be a very fluid situation. As of now, we consider this selloff a forest fire that helps the natural market cycle of growth and replenishment, or a much-needed rebalancing of a market that prematurely priced in a trade resolution as a foregone conclusion. For aggressive traders, it may even prove a unique buying dip. We will alert you when a bonafide reversal occurs.
Meanwhile, the world’s two superpowers assert their dominance in the global market. JPMorgan (NYSE:JPM) global market strategist Samantha Azzarello pointed out that China’s retaliation came right in time for the weekly market open, and not any time sooner. And trade risk is on course to escalate further, as U.S. officials are expected to release details of tariffs on all remaining Chinese goods, to the tune of $300 billion.
The CAT )—with the stocks of the two companies plunging 5.6% and 4.9% respectively on the session.
The Utilities sector (+1.07%) were the only ones to close in green territory.
China's fresh tariff hikes targeted Trump’s farmers support base since last year.
On the European trade-front, EU officials confirmed they were finalizing a list of U.S. imports they will impose higher duties on should the U.S. Administration go ahead with levies on European automobile imports. The report was enough to send shares on the STOXX 600 1.21% lower.
Meanwhile, other assets signaled a shift to risk-on on Tuesday after signs of an improved trade outlook. Yields on Dollar Index higher, after finding support above the 50 DMA in the two previous session.
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Gold Daily Chart
Gold retreated both on risk-on and USD strength. Technically, it crossed above its downtrend line since February and remains above the 100 DMA for now, potentially blowing out a H&S top. This jibes with the greenback’s struggle to remain above its ascending triangle. Also, the MACD and RSI demonstrate bullish interest.
WTI Daily Chart
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Stocks
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Canada’s S&P/TSX Composite closed down 0.64 percent Monday.
- The U.K.’s FTSE 100 gained 0.4%, the largest climb in three weeks.
- Germany’s DAX climbed 0.5%.
- The MSCI Emerging Market Index slid 0.7%, the lowest in almost four months.
- The MSCI Asia Pacific Index fell 1%, the lowest in almost 16 weeks.
Currencies
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The Canadian loonie was down 0.01 percent against the U.S. greenback early Tuesday, trading at 0.7419.
- The Dollar Index rose 0.05%, the first advance, so far, in a five-day period.
- The euro climbed 0.1% to $1.1237, the strongest in more than three weeks.
- The British pound slipped 0.1% to $1.294, the weakest in more than two weeks.
- The Japanese yen lost 0.4% to 109.74 per dollar, the biggest dip in more than a month.
Bonds
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Canada’s 10-year yield was up early Tuesday at 1.681, a 0.96-percent increase.
- The yield on 10-year Treasurys increased one basis point to 2.42%.
- Germany’s 10-year yield gained one basis point to -0.06%, the biggest climb in more than a week.
- Britain’s 10-year yield climbed two basis points to 1.119%, the largest advance in more than a week.
- Italy’s 10-year yield dropped one basis point to 2.695%, the biggest dip in two weeks.
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