Opening Bell: Positive China Trade Rhetoric Boosts U.S. Futures, USD
Pinchas Cohen | Aug 29, 2019 12:09
- China's Commerce Ministry comments renew hopes of trade progress
- UK's FTSE 100 gains on weakened pound, pressured by disorderly Brexit fears
U.S. futures on the S&P 500, Dow Jones and NASDAQ, along with shares in Europe, broke away from a sinking Asian session after comments on trade from China’s commerce ministry this morning rekindled hopes of possible progress in the U.S.-Sino standoff.
Yields rebounded along with the U.S. dollar, but gold has headed lower. Bitcoin's plunge continued.
h2 Global Financial Affairs/h2The Stoxx Europe 600 Index, along with U.S. contracts, turned away from recession worries when a spokesman for China’s commerce ministry said the Asian nation and the U.S. were in “effective” contact and that the two sides should discuss removing new tariffs.
In the Asian session, most benchmarks fell, with Hong Kong’s Hang Seng (+0.41%) breaking the trend and South Korea’s KOSPI (-0.4%) lagging. The U.K.'s FTSE 100 jumped at the open, however, boosted by a weakening pound amid concerns of a disorderly No Deal Brexit, after UK Prime Minister Boris Johnson yesterday moved to suspend parliament.
Sterling has slipped from the support of early August highs, as the short-term uptrend line from the August lows converges with the long-term downtrend line since early May.
U.S. stocks climbed during yesterday's session, for a second day, closing near the day's highs. The S&P 500 gained 0.65% with Energy, (+1.43%), tracking a jump in oil prices. The only sector in the red was Utilities, (-0.27%). Traders latched on to rising oil prices absent any trade war clarity on Wednesday.
Oil's surge was driven by a surprise inventory drawdown, compounded by ongoing Iran tensions, all of which extended the commodity's multi-day advance.
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Technically, oil's price is peaking above the 200 DMA, after today's remarks from China’s commerce ministry pushed slumping prices higher.
Yields on the 10-year Treasury tracked higher, after the curve inversion with the 2-year steepened. Yesterday, Treasury Secretary Steven Mnuchin said the Trump administration was considering ultra-long 50- and 100-year bonds, sending 30-year yields to a record low.
The yen, along with gold, dropped as newfound risk appetite returned to markets.
Bitcoin tumbled -2.75% for the third day of losses, totaling 8.85%. Technically, the price broke the downside of a symmetrical triangle, suggesting a bull-bear struggle ended with a bearish victory.
h2 Up Ahead/h2- The second reading of U.S. Q2 GDP, released Thursday, is expected to refine estimates of slightly lower economic growth.
- Bank of Korea's next policy decision and briefing will take place on Friday.
- Eurozone CPI data for August is also due Friday.
- S&P 500 futures are up 0.96% as of this writing.
- The Stoxx Europe 600 Index has advanced 1.06%.
- The Shanghai Composite slumped 0.1%.
- The MSCI Emerging Markets Index dipped 0.1%.
- The dollar index increased less than 0.08% to 98.203
- The British pound sank 0.1% to $1.22.
- The yuan was little changed at 7.164 per dollar.
- The Japanese yen advanced 0.12% to 106.23 per dollar.
- The yield on 10-year Treasuries decreased less than one basis point to 1.48%.
- The yield on two-year Treasuries advanced one basis point to 1.51%.
- Germany’s 10-year yield advanced one basis point to -0.70%.
- Britain’s 10-year yield gained one basis point to 0.451%.
- Japan’s 10-year yield fell one basis point to -0.285%.
- West Texas Intermediate crude was little changed at $52.21 a barrel, the highest in more than a week.
- Iron ore declined 1.2% to $80.38 per metric ton, the lowest in five months.
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