- U.S. Futures, European shares relatively flat as investors await trade updates
- Escalating violence in Hong Kong may spill over to U.S.-China trade relations
Key Events
As investors await further news on any trade-related developments, U.S. futures and European stocks remain in a holding pattern. The dollar regained yesterday’s losses, pressuring gold and the Japanese yen. Treasury yields advanced after the bond market's long weekend.
Global Financial Affairs
Investors are scanning the news for any progress on trade after the weekend's dramatic developments, in which China demanded tariff rollbacks to be concurrent with the so-called Phase I of the trade deal. U.S. President Donald Trump rebuffed those hopes, saying he agreed to nothing, and won’t cancel all the tariffs, until he gets what he wants.
Though markets aren't seeing selloffs, investors must be getting nervous, viewing the lack of new information as a possible silence before the storm. At the same time, the dramatic escalation of unrest in Hong Kong makes the already bad diplomatic situation between the U.S. and China worse, as one geopolitical event could easily spill over into the other.
Futures for the main American benchmarks—including contracts for the S&P 500, NASDAQ and Dow—fizzled after nudging higher earlier this morning, just a few hours after the S&P 500 Index fell for the first time in four sessions.
The STOXX Europe 600 rallied, spurred by carmakers, after news broke the White House might postpone duties on European cars. Earlier, shares listed on Hong Kong’s Hang Seng, (+0.28%), managed to stabilize after Monday's sharp losses. This despite schools and universities having been closed because of safety concerns after protestors converged on the city's financial center.
Stocks on Tokyo’s Nikkei 225 outperformed, (+0.81%), followed closely by Seoul’s KOSPI, (+0.79%). China’s Shanghai Composite enjoyed a modest advance, (+0.17%), despite the trade news lull.
Yields, including for the 10-year Treasury note, are climbing toward the top of a rising channel, just after breaking through the downtrend line since November 2018. The 200 DMA waits above the channel for added resistance.
The USD pared most of yesterday’s losses, peaking above the 50 DMA, after completing a small double bottom.
Sterling trimmed some of Monday’s leap, even as it trades within a bullish, falling flag, after breaking through the downtrend line since April 2018.
The New Zealand dollar slumped after weakening inflation expectations spurred bets on a rate cut tomorrow.
Up Ahead
- President Donald Trump is scheduled to deliver lunchtime remarks today at the New York Economic Club.
- Earnings season is slowing. Still, some key reports are due this week, including from Cisco (NASDAQ:CSCO), Walmart (NYSE:WMT) and NVIDIA (NASDAQ:NVDA).
- Fed Chairman Jerome Powell testifies before the Joint Economic Committee of Congress in Washington Wednesday.
- Thursday brings China retail sales and industrial production data.
- U.S. retail sales are released on Friday. They're forecast to rebound in October after unexpectedly falling the prior month.
Market Moves
Stocks
- Futures on the S&P 500 Index were little changed.
- The Stoxx Europe 600 Index gained 0.2%.
- The U.K.’s FTSE 100 Index climbed 0.3%.
- The MSCI Asia Pacific Index rose 0.4%.
- The MSCI Emerging Markets Index rose 0.6%.
Currencies
Bonds
- The yield on 10-year Treasuries increased less than one basis point to 1.95%.
- Germany’s 10-year yield rose one basis point to -0.24%.
- Britain’s 10-year yield gained less than one basis point to 0.816%.