Opening Bell: U.S. Futures, Yuan Dip On Fears Of Trade Tariff Ramp-Up
Investing.com | May 13, 2019 08:29
- U.S. futures dive deeper into the red as investors dread Chinese tariff retaliation
- European shares suffer highest selling volumes since Oct. 10
- Yen, Treasury climb on risk off h2 Key Events/h2
- A slew of Federal Reserve policymakers will speak this week: Boston Fed President Eric Barkin also make appearances.
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Bank of Canada board member Timothy Lane speaks on Monday.
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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 no signs of slowing down .
STOXX Daily Chart
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The STOXX 600 slipped to the lowest price since March 25—and another 0.6% decline would push it to the the lowest level since March 12—as investors waited for details on China's retaliatory measures after the U.S. pressed ahead with higher tariffs on imports from the Asian country on Friday. Stocks on the pan-European benchmark sold off on the highest selling volume since October 10—a month and a half before the infamous global December rout. Technically, the index is in the making of a H&S top, with the left shoulder formed with the head’s low finding support by the lows of the left shoulder.
Germany’s DAX in particular underperformed as the high dependence of its listed companies on exports means they would be harshly hit by any further expansion of trade tariffs from the U.S.
In the earlier Asian session, the yen and Treasurys advanced as investors ramped up their risk-off positions. Perhaps, the most unnerving aspect of the renewed trade headwind, for traders, is the lack of a set date on when high-level negotiations between the two economic powers will resume. An open-ended risk comes as kryptonite for the market, as it carries the highest uncertainty.
Japan’s dollar .
UST 10-Year Daily Chart
The yield on 10-year Treasurys provided a downside breakout on an intraday basis, to a bearish pennant, resuming the medium-term downtrend line since the November top, after falling below the short-term uptrend line since March 28.
JPY Daily Chart
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The yen strengthened against the dollar, with the USD/JPY pair completing a double top on an intraday basis.
XAU Daily Chart
Gold fell even amid widespread risk off, as it became more expensive after the USD rise. The precious metal is struggling against the neckline of a H&S top amid a return move. Its current trading pattern is creating a rising, bearish flag.
Overall, we argued that stand to take a hit from the higher tariffs imposed by the White House on Friday.
Meanwhile, 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.
Stocks
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Canada’s S&P/TSX Composite closed down 0.15 percent last Friday.
- The MSCI Asia Pacific Index fell 0.7%.
- The MSCI Emerging Market Index dropped 0.6%.
Currencies
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The Canadian loonie was down 0.09 percent against the U.S. greenback early Monday, trading at 0.7443.
- The Dollar Index was flat, giving up a small gain.
- The offshore yuan fell 0.8% to 6.8985 per dollar and the biggest drop in more than nine months.
- The euro climbed less than 0.05% to $1.1234, the strongest in three weeks.
Bonds
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Canada’s 10-year yield was down early Monday at 1.696, a 2.13 -percent decrease.
- The yield on 10-year Treasurys dropped four basis points to 2.43%.
- Germany’s 10-year yield fell one basis point to -0.05%.
Commodities
- The Bloomberg Commodity Index slid 0.3% to 78.46.
- LME nickel fell 0.8% to $11,830 per metric ton.
- may strengthen the case for the group of oil producers to continue with production cuts.
- Soybeans slipped 0.9% to $8.02 a bushel.
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