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Opening Bell: Stocks, U.S. Futures Sink On Hong Kong Unrest, Trade Concerns

Published 11/11/2019, 12:33
Updated 02/09/2020, 07:05

  • Most Asia markets close lower after protestor shot by police in Hong Kong street confrontation
  • Trump rhetoric on trade continues to vacillate, further unsettling markets
  • Treasury market closed in U.S. for Veteran's Day holiday
  • Key Events

    Global stocks were sold off this morning, pressuring U.S. futures, as violence in Hong Kong erupted citywide earlier today, adding to market uncertainty already supported by doubts of a trade war resolution.

    Contracts on all four major U.S. indices—including for the Dow, S&P and NASDAQ—followed Asian and European shares lower as investors sought shelter, after a Hong Kong protestor was shot in a confrontation with local police, adding to concerns of yet another roadblock on the path to tariff de-escalation. This comes after U.S. President Donald Trump said Friday that while China would “like to have a rollback, I haven’t agreed to anything," at which time he also asserted that he wouldn’t roll back all tariffs in any case.

    Global Financial Affairs

    Investors kept propping up U.S. stocks to record highs last week, despite the touch-and-go on trade, suggesting markets believed a deal would eventually be reached and that they viewed the conflicting rhetoric as nothing more than a negotiation strategy. Could markets now be showing initial signs investors have become fearful that yet another trade deal is about to fizzle out?

    Over the weekend China's economic outlook continued to show signs of slowing: factory gate prices dropped for a fourth month, heightening concerns about the effect of the trade war on the world’s second largest economy. Will this cause the Asian nation to soften its stance? We’d bet against it, considering China knows Trump is under the gun on two fronts: impeachment hearings are set to begin this week, and presidential elections will commence in less than a year.

    The STOXX 600 fell as this week's trading began, dragged down by miners and banking shares. Hong Kong’s Hang Seng underperformed, (-2.62%). China’s Shanghai Composite (-1.83%) was Asia's second worst-performing major index . Both were forced to open lower, but those price differentials were meaningless from a technical perspective, as they were merely “area gaps.”

    Hang Seng Daily

    The Hang Seng is struggling between maintaining its short-term course within a rising channel from the Aug.15 bottom and the downtrend line since the April 15 top.

    On Friday, U.S. shares finished higher for the week, after oscillating between gains and losses on conflicting trade news. The S&P 500 Index hit another record close, climbing for the fifth straight week.

    Due to the Veteran's Day holiday in the U.S. today, Treasury markets are closed. The dollar was little changed, but gold trimmed half of Friday’s losses, while Bitcoin wiped out all of Sunday’s gains, after finding resistance at the 200 DMA.

    Oil Daily

    Oil prices fell from a seven-week high on Hong Kong and trade driven risk-off sentiment. In addition, Iran announced it has discovered a mammoth new oil field projected to contain upward of 50 billion barrels of reserves. Technically, the price of WTI is correcting after reaching the top of a rising channel.

    Up Ahead

  • Companies reporting earnings this coming week include Tencent (OTC:TCEHY), Walmart (NYSE:WMT) and NVIDIA (NASDAQ:NVDA).
  • New Zealand’s policy decision is due Wednesday, with markets tilting in favor of an interest rate cut.
  • Fed Chairman Jerome Powell addresses the Joint Economic Committee of Congress on Wednesday.
  • Thursday brings China retail sales and industrial production data.
  • U.S. retail sales figures will be 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 decreased 0.3%.
  • The Stoxx Europe 600 Index declined 0.2%.
  • The Shanghai Composite Index decreased 1.8%.
  • The MSCI Emerging Markets Index sank 1.2%.
  • Currencies

    • The Dollar Index was unchanged.
    • The euro advanced 0.1% to $1.1025.
    • The British pound climbed 0.2% to $1.2801.
    • The onshore decreased 0.2% to 7.008 per dollar.
    • The Japanese yen climbed 0.3% to 108.98 per dollar.

    Bonds

  • Germany’s 10-year yield was unchanged at -0.26%.
  • Britain’s 10-year yield advanced one basis point to 0.794%.
  • Japan’s 10-year yield declined one basis point to -0.063%.
  • Commodities

  • West Texas Intermediate crude dipped 1.1% to $56.62 a barrel.
  • Iron ore fell 0.7% to $76.99 per metric ton.
  • Gold gained 0.3% to $1,463.44 an ounce.
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