Opening Bell: U.S. Futures Defy Global Slide As Fed Hopes Beat Trump Trade Salvos
Investing.com | Jul 31, 2019 10:34
- U.S. futures buck global slide ahead of first Fed rate cut in a decade
- European shares fall on mixed earnings, topping out
- Asian indices flash red across the board as Trump revives negative trade rhetoric
- Oil jumps on bullish API inventory, but may have hit a technical ceiling
Futures on the S&P 500, Dow and NASDAQ 100 shrugged off a global decline this morning to tune back into rate cut hopes, after U.S. President Donald Trump downplayed chances of a trade deal with China this year—overshadowing the first anticipated U.S. rate cut since before the 2008 financial crisis.
Contracts on all four indices pointed to a rebound later in the U.S. session, after the Russell 2000 was the only major benchmark to close in the green on Tuesday, hitting the highest level since May 6.
The STOXX 600 wavered after edging lower on mixed earnings results, though price moves were enough to complete a minor double top, whose bearish tilt is supported by high volume and both MACD and RSI sell signals. If the pan-European benchmark falls beneath its June low—guarded by the 200 DMA—it will have completed a double-top, months in the making.
In the earlier Asian session, regional markets sank in a sea of red as Trump's anti-China rhetoric dampened investor enthusiasm ahead of the Fed's interest rates decision, coming out later today.
Hong Kong’s Hang Seng (-1.31%) led regional stocks into negative territory as a tropical storm forced local markets to close early for the first time in nearly two years, further upsetting traders' nerves after weeks of social unrest.
The index topped out, with the price gapping down and completing an Island Reversal, often appearing at the end of an intermediate or even major move. It did so posting an H&S top. However, the bearish sentiment is mitigated with the relatively small rally—about 8% in June—as well as underwhelming volume on the breakout.
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The Hong Kong dollar fell to the lowest level since June 18. The currency has recently shown a positive correlation with the country's equity benchmark, rather than the usual negative divergence. This relationship demonstrates how civil protests are actually the main headwind preying on investors' minds.
South Korea’s KOSPI (-0.69%) was dragged lower by Samsung (KS:005930) (-2.58%) after the tech giant reported a sharp decline in profit, which eclipsed the company’s optimistic outlook for its memory chip business.
Yields on 10-year Treasurys resumed a consolidation as the bond market appeared to be fine-tuned with the expected path to lower interest rates. The dollar eked out a ninth-day gain, though yesterday’s shooting star sent warnings of a correction to the uptrend.
Crude oil opened higher for the second day on bullish API inventory data. Technically, it developed a doji shooting star, which requires a closing price, at the very top of a rising flag, bearish following the five straight-day loss mid month, as it triggered a death cross. Contrarian traders may take advantage of a rare entry from a risk-reward perspective.
h2 Up Ahead/h2- Earnings include: Siemens (OTC:SIEGY), Toyota (NYSE:TM), Honda (NYSE:HMC), Ferrari (NYSE:RACE), General Motors (NYSE:GM), BMW (MI:BMW), Rio Tinto (LON:RIO), Shell (LON:RDSa) and Verizon (NYSE:VZ).
- Fed officials announce their decision on Wednesday. Chairman Jerome Powell will hold a press conference following the FOMC’s meeting.
- The Bank of England policy decision is due on Thursday.
- The U.S. July jobs report is due on Friday.
Stocks
- The MSCI All-Country World Index declined 0.1%, the lowest in more than a week.
- The U.K.’s FTSE 100 dropped 0.2%.
Currencies
- The Dollar Index was little changed.
- The euro was unchanged at $1.1155.
- The British pound increased 0.2% to $1.2174, the first advance in a week.
- The Japanese yen climbed 0.1% to 108.53 per dollar.
Bonds
- The yield on 10-year Treasurys slid one basis point to 2.05%, the lowest in a week.
- Germany’s 10-year yield fell one basis point to -0.40%.
- Britain’s 10-year yield declined less than one basis point to 0.632%, the lowest in about three years.
- Japan’s 10-year yield fell one basis point to -0.155%.
Commodities
- West Texas Intermediate crude climbed 0.7% to $58.46 a barrel.
- Gold was little changed at $1,430.44 an ounce.
- The Bloomberg Commodity Index rose 0.2%, the highest in a week.
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