- Trade resolution remains elusive, weighing on markets
- Sterling rebounded from a third day selloff
- Oil pulls back from a three-month high
Key Events
Stocks have been struggling to keep the global rally momentum going, as markets await some clarity on where things stand with a resolution of the U.S.-China trade spat. U.S. futures for the S&P 500, Dow Jones and NASDAQ, along with European shares initially broke away from sagging Asian markets, but both Wall Street contracts and EuroStoxx have since been stalled.
Trade remains the wild card, pressuring stocks till there's some sort of actual resolution. Investors holding on to the priciest stocks in history are becoming increasingly nervous and will need to find new reasons to add risk.
Treasurys and gold climbed for a second day.
The S&P 500 Index edged higher on Tuesday, adding just a single point, supported by U.S. factory and housing numbers.
Technically, SPX futures have been struggling to sustain highs since the Monday record, with negative divergences flagged in the MACD and the RSI.
The STOXX Europe 600 Index has kept some of its early gains, but is being pressured luxury TV and stereo maker Bang & Olufsen (LON:0MRM). Shares plunged after the company issued iits fourth profit warning in a year.
Shares listed on Tokyo’s Nikkei 225 underperformed, (-0.55%); China’s Shanghai Composite was also in the red (-0.18%). Hong Kong’s Hang Seng edged higher, (+0.07%), followed by Australia’s ASX 200, (+0.06%).
Global Financial Affairs
Major U.S. indices managed to eke out gains yesterday, on manufacturing, which is normally a sore point for investors, and better-than-expected building permits, which climbed to a 12-year high. These two seemingly disparate events have a hidden link.
Housing is an economic bellwether. Its recent strength is further boosted by the growth we’ve seen in manufacturing, as the two industries are typically related.
FedEx (NYSE:FDX) plunged in after-hours trading. The losses were triggered by the global shipper cutting its profit forecast for the second straight quarter during its Q2 2020 earnings release.
The pound edged lower for a third day on renewed concern that a no-deal Brexit is possible. Cable rebounded after demand, sitting at last Thursday’s lows, pushed back.
West Texas crude slipped after yesterday moving above $61 a barrel for the first time in three months.
Impeachment proceedings against U.S. President Donald Trump transition into open debate today, ahead of the House of Representatives' vote this evening on two articles charging the president with abuse of power and obstruction of Congress. If Trump is impeached during today's proceedings, which is the consensus expectation since Democrats control the House, the next step will likely be a January trial in the Senate, adding yet another degree of uncertainty. Nevertheless, Trump is expected to be acquitted in the Senate, where there is a Republican majority.
The outlook for America’s monetary policy remains dovish. On Tuesday, two Federal Reserve policymakers, Boston Fed President Eric Rosengren and New York Fed President John Williams, reiterated that interest rates are on hold. Still, the miserable results from FedEx were a reminder of lingering economic growth headwinds.
Up Ahead
- Policy decisions are due Thursday from the Bank of Japan and the Bank of England.
- Revised U.S. GDP data will be released on Friday.
- The end of the trading week also brings quadruple witching to U.S. markets with the simultaneous expiration date of stock index futures, stock index options, stock options and single stock futures. Expect elevated trading volume, particularly in the last hour of trade.
Market Moves
Stocks
- Futures on the S&P 500 Index were little changed.
- The Stoxx Europe 600 Index rose 0.1%.
- The U.K.’s FTSE 100 Index added 0.2%.
- The MSCI Asia Pacific Index dipped 0.1%.
Currencies
- The Japanese yen was little changed at 109.43 per dollar.
Bonds
- The yield on 10-year Treasuries declined two basis points to 1.86%.
- Germany’s 10-year yield dipped one basis point to -0.30%.
- Britain’s 10-year yield decreased one basis point to 0.755%.