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Opening Bell: Stocks Drift On Fears Of Trade Tariffs Deadlock; Dollar Drops

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewNov 06, 2019 12:25
uk.investing.com/analysis/opening-bell-stocks-drift-on-fears-of-trade-tariffs-deadlock-dollar-drops-200434052
Opening Bell: Stocks Drift On Fears Of Trade Tariffs Deadlock; Dollar Drops
By Investing.com (Pinchas Cohen/Investing.com)   |  Nov 06, 2019 12:25
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  • U.S. futures subdued on fears of trade deadlock over tariffs cutback
  • European shares drift on Societe Generale , Mark & Spencer profits fall
  • U.S. dollar retreats, flat at late July levels

Key Events

European shares and futures on the S&P 500, Dow and NASDAQ 100 drifted on fears of possible complications in U.S.-China trade negotiations, while bullish numbers for the U.S. service sector trimmed expectations of further Fed accommodation.

In particular, U.S. contracts were traded in a narrow range, after closing near Monday’s record highs yesterday.

The STOXX 600 returned toward the earlier lower opening after rebounding to the highest level since mid July 2015. Societe Generale (PA:SOGN) and Marks and Spencer (LON:MKS) posted a profits flop, eclipsing positive corporate results from Adidas (DE:ADSGN) and BMW (DE:BMWG).

Meanwhile, upbeat German factory orders only mildly boosted the euro, as eurozone manufacturing activity picked up slightly in October but remained near its weakest level in seven years.

In the earlier Asian session, regional equities ended mixed after Beijing was reported to be pressing for Washington to roll back tariffs before any progress on the deal could be made. Chinese officials are allegedly asking for 15% duties imposed on $125 billion of domestic goods in September to be cancelled as part of the so-called "Phase One" deal. The lack of any meaningful response by the U.S. side spurred fears of a new breakdown of negotiations.

Japan’s Nikkei 225 (+0.22%) nonetheless managed to cling onto persisting trade hopes, outperforming its peers and hitting a fresh 13-month high, also helped by a weaker yen and rising bond yields, which buoyed exporters and financials shares.

The 10-year yield climbed to its highest level in more than five months as an auction was met with weaker-than-expected demand amid a global debt sell-off. Technically, the yen is struggling with the 200 DMA, as it attempts to resume its rebound since August against the long-term downtrend.

Australia’s S&P/ASX 200 (-0.55%) underperformed.

Global Financial Affairs

Yesterday, U.S. stocks ended slightly off their record highs, while the market evaluated corporate profits and the broader economic outlook, with the elusive U.S.-China trade deal looming large in the background.

S&P 500 Daily Chart
S&P 500 Daily Chart

On the S&P 500 chart, the red candle posted yesterday, coming after Monday’s doji on a gap, could—although small—be the prelude for an Island Reversal, as it may prove to be an Exhaustion Gap: it may be the third one of this rally, since the Oct. 3 bottom.

UST 10-Year Daily Chart
UST 10-Year Daily Chart

Meanwhile, yields on 10-year Treasurys paused their ascent after a three-day climb. News that U.S. non-manufacturing sectors expanded more than forecast in October triggered a brief equity rally but dimmed hopes for a December rate cut from the Federal Reserve. Technically, yields are struggling against a confluence of the top of a symmetrical triangle and the downtrend line since November 2018.

DXY Daily Chart
DXY Daily Chart

The dollar retreated after strengthening for the second day on Tuesday, after reaching the highest price since it fell below its long-term uptrend line since February 2018. The price has remained flat since the Fed inaugurated its path to lower interest rates with a first rate cut on July 31, when the price was 98.06.

The yuan traded above the 7.000 mark for a second day.

Oil retreated after failing to cross above the 200 DMA for two days in a row. As for other instruments, a stronger direction for WTI prices continues to hinge on trade progress.

Up ahead

Market Moves

Stocks

  • The Stoxx Europe 600 Index declined.
  • Futures on the S&P 500 Index was little changed.
  • The U.K.’s FTSE 100 Index fell 0.1%.
  • The MSCI All-Country World Index was little changed.
  • The MSCI Emerging Market Index sank 0.2%.
  • Currencies

  • The Dollar Spot Index declined 0.15%.
  • The euro was steady at $1.1079.
  • The British pound was little changed at $1.2883.
  • The Japanese yen strengthened 0.1% to 109.01 per dollar.
  • Bonds

  • The yield on 10-year Treasuries decreased less than one basis point to 1.86%.
  • The yield on two-year Treasuries dipped less than one basis point to 1.62%.
  • Britain’s 10-year yield gained less than one basis point to 0.779%.
  • Germany’s 10-year yield rose one basis point to -0.30%.
  • Japan’s 10-year yield jumped four basis points to -0.079%.
  • Commodities

  • West Texas Intermediate crude declined 0.5% to $56.92 a barrel.
  • Gold climbed 0.1% to $1,484.38 an ounce.
  • The Bloomberg Commodity Index dipped 0.2%.
  • Opening Bell: Stocks Drift On Fears Of Trade Tariffs Deadlock; Dollar Drops
     

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    Opening Bell: Stocks Drift On Fears Of Trade Tariffs Deadlock; Dollar Drops

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