Breaking News
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Opening Bell: Stocks Bounce Back From Trade Blues; USD, Oil Race Ahead

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewAug 06, 2018 06:30
ca.investing.com/analysis/opening-bell-stocks-bounce-back-from-trade-blues-usd-oil-race-ahead-200197387
Opening Bell: Stocks Bounce Back From Trade Blues; USD, Oil Race Ahead
By Investing.com (Pinchas Cohen/Investing.com)   |  Aug 06, 2018 06:30
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • Carmakers boost European equities, US futures point to rebound from Asian weakness

  • Australian shares confirm outperformance over US-China trade war

  • US stocks cap five weeks of gain on positive economic and earnings data

  • Dollar hits 13-month high

Key Events

European shares and futures on the S&P 500, Dow and NASDAQ 100 crawled higher on Monday, as investor mood eased after the latest US-China trade salvos impacted Asian markets.

The pan-European STOXX Europe 600 gained ground, with carmakers and telecommunications companies offsetting losses in bank shares, which were dragged lower by HSBC (NYSE:HSBC)'s disappointing earnings. The outperformance of auto stocks is particularly surprising if we consider that heightened trade tensions are set to hurt car exports in particular.

Earlier, during Asian trade, Japan’s TOPIX dropped 0.56 percent, for a total three-day slide of 2.1 percent.

China’s Shanghai Composite underperformed, plunging 1.29 percent, bringing its combined six-day fall to almost 6 percent.

Hong Kong’s Hang Seng managed to buck the trend, rising 0.52 percent.

South Korea’s KOSPI was flat, retreating less than 0.05 percent.

Australia’s S&P/ASX 200 gained 0.61 percent. The Aussie benchmark hit a 10-year high in July and steadily outperformed its regional peers since the start of the US-China trade spat, despite its dependency on the Chinese market. Several reasons can explain this outperformance:

1) Australian shares have been considered underpriced, as they stand far away from their record levels.

2) The financial sector has enjoyed a reversal after plunging on customer abuse investigations at the country's four largest banks.

3) A weak Aussie dollar favors both equities and tourism.

4) China's efforts to curb pollution led to a shift to higher-quality Iron ore—and Australian's speciality.

Global Financial Affairs

S&P 500 Daily Chart
S&P 500 Daily Chart

Friday's US session capped a fifth straight weekly gain for both the S&P 500 and the Dow Jones. The performance of the Dow is noteworthy, as the mega-cap companies listed on the index are dependent on exports for continued growth: traders seem to have prioritized actual economic and corporate performance over trade worries.

US payrolls ticked 157,000 higher in July, missing the 190,000 estimate, but the overall jobs report was favorable. The unemployment rate fell one-tenth of a percentage point to 3.9 percent. Average hourly earnings edged 2.7 percent higher year-on-year and June's jobs numbers were revised higher, from 244,000 to 248,000. Average gains for the three-month period were 224,000.

The upbeat US economy and recent corporate earnings beats helped President Donald Trump defend his tariffs hardline and re-instate that the country is winning the trade battle. The question investors must be asking themselves now is whether Trump's renewed rhetoric could undo the country's robust macro and micro fundamentals.

Meanwhile, Beijing said it is prepared to cope with the economic fallout of the trade war. Chinese policymakers stepped in to support the yuan on Friday, helping a rally, after a record string of weekly losses saw the currency close at 7 per dollar. The renminbi later pared some of those gains.

DXY Daily Chart
DXY Daily Chart

The Dollar Index climbed for the fourth session out of five, to reach 0.15 percent from the June 28, 95.39 close, the highest level in almost 13 months. Technically, the USD is nearing the top of an ascending triangle, bullish with an upside breakout, demonstrating that demand has absorbed all the available supply and is poised to bid prices higher.

The yield on 10-year Treasuries steadied at 2.95 percent.

WTI Daily Chart
WTI Daily Chart

Oil climbed above $69, even against the headwind of a stronger dollar. Technically, however, its climb is within a descending triangle, bearish with a downside breakout, suggesting supply has absorbed all of the demand and is prepared to go lower.

Up Ahead

  • Earnings season continues with:

    • Disney (NYSE:DIS), due tomorrow after market close, $1.97 EPS forecast, VS $1.58 for the same quarter last year

    • Twenty-First Century Fox (NASDAQ:FOX), due Wednesday after market close, $0.53 EPS forecast, VS $0.36 for the same quarter the previous year.

  • Canada’s Ivey PMI for July is released Tuesday.

  • The Reserve Bank of Australia is forecast to hold its cash rates at record lows and confirm its the long-term guidance on Tuesday

  • The Bank of Japan releases minutes from its July 30-31 meeting on Wednesday.

  • The preliminary reading of Japan's second-quarter gross domestic product is out on Thursday. Economists expect a robust rebound from the first-quarter contraction.

  • Analysts expect data due on Friday will show a pick-up in US consumer prices in July

Market Moves

Stocks

Currencies

  • The Canadian loonie was down 0.27 per cent against the U.S. greenback early Monday, trading at 0.7676.

  • The Dollar Index gained 0.15 percent.

  • The euro dropped 0.1 percent to $1.1556, reaching the weakest level in almost six weeks on its fifth straight decline.

  • The British pound slipped 0.1 percent to $1.2993, the weakest level in 11 months.

  • The Japanese yen fell 0.1 percent to 111.33 per dollar.

Bonds

  • Canada’s 10-year yield was steady early Monday at 2.353.
  • The yield on 10-year Treasuries gained one basis point to 2.95 percent.

  • Germany’s 10-year yield climbed one basis point to 0.42 percent.

  • Britain’s 10-year yield climbed one basis point to 1.329 percent.

Commodities

  • The Bloomberg Commodity Index fell 0.2 percent.

  • West Texas Intermediate crude climbed 0.4 percent to $68.78 a barrel.

  • LME copper dipped 1.3 percent to $6,124.50 per metric ton, the lowest in more than two weeks.

  • Gold declined 0.2 percent to $1,212.69 an ounce.

Opening Bell: Stocks Bounce Back From Trade Blues; USD, Oil Race Ahead
 

Related Articles

FactSet Research Systems Inc
Podcast: Evergrande, US Futures, Central Banks in Focus By FactSet Research Systems Inc - Sep 23, 2021

US futures are indicating a higher open as of 05:00 ET. Central banks in focus with Norges Bank, SNB, and BoE policy announcements this morning, following the FOMC announcement...

Opening Bell: Stocks Bounce Back From Trade Blues; USD, Oil Race Ahead

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email