OVERNIGHT MARKET SNAPSHOT (as at 8:30am AEDT)
- SPI200 (Dec) overnight futures up 19 pts to 6686
- SP500 down 3.66 pts to 3074.61
- NASDAQ up 1.48 pts to 8434.68
- Dow Jones up 30.52 pts to 27,492.63
- FTSE100 up 18.39 pts to 7388.08
- DAX30 up 12.22 pts to 13,148.50
- GOLD futures US Session (December) down $24.80 to $1486.30 an ounce
- COPPER futures US Session (Comex Dec) up $0.030 to $2.7010 a pound
- OIL futures US Session (Nymex Dec) up $0.65 to $57.19 a barrel
- CRB Index up 1.00 pts to 182.09
- AUDUSD trading at 0.6894
- EURUSD trading at 1.1075
- GBPUSD trading at 1.2884
- USDJPY trading at 109.1300
- USD Index US Session (ICE Dec) up 0.379 to 97.745
US Stock Indexes were again supported on growing signs that the US and China are inching towards a trade deal. Traders are happy to be ‘risk on’ into equities as safe havens across the board took a hit. A UN report on the cost of the trade war shows that both the US and China are hurting. The trade war and tariffs cut imports of Chinese goods to the US by more than a quarter or $35 Billion in just the first half of 2019 and also drove up prices for US consumers. Some of the export losses for China have been filled by other countries, such as Taiwan and Mexico, but not all as some have been lost completely. The longer a deal takes to get done, the more chance that the change in export dynamics will be permanent. The DOW closed up 0.42% while the broader SP500 was up 0.37% and the Nasdaq also ended up 0.56%. In Europe, major indexes were also supported by trade war hopes. Both the DAX and the FTSE are now hovering around previous major highs so it will be interesting to see how recent buyers react. A consolidation around these levels would be bullish and may lead to a run up to the all time highs in the near term.
China is still negotiating hard coming into a potential signing of the ‘phase 1’ trade deal as they press Trump to remove more tariffs imposed in September worth 15% on about $125 billion worth of Chinese goods. As part of the deal, the US is expected to already be scraping tariffs scheduled for 15th Dec on about $156 billion worth of Chinese imports.
The USD rallied hard in European trade as buyers continued to put the pressure on the bears. Price action continues to hold within the longer term uptrend so we may expect some further bullish action on the dollar as price comes off the lower bounds of the trend channel. The EURO fell apart and pushed down through minor support at 1.1130 on the open of the European session as the USD rallied. Price also pushed into previous lows at 1.1076 so it will be interesting to see if buyers step in to squeeze out recent sellers for a bounce. The GBP also came under pressure but held up better than the Euro under the USD buying. Price is still contained between major resistance up at 1.3005 and support around 1.2805. The AUD is finding some choppy action as bulls rally on trade deal hopes but USD buying caps the action. The USDJPY saw a steady grind higher with next to no pullbacks as safe haven YEN buyers stepped aside and the USD rallied.
Gold took a hit as recent safe haven buyers bailed and sellers dived into the action on wide spread aversion from safe haven assets. Interestingly, price pushed straight back down into the support zone around 1485 on the futures price so we will be watching to see if buyers can stand firm again. Crude Oil continued to find bullish action as buyers were happy to step in on the increased potential for a lift in demand from a trade deal. Also helping Oil prices is OPEC suggesting that they will cut production further in December. Copper had a very bullish session being helped along by trade sentiment against the flow of the USD. Price spiked up through a key high at 2.7050 so we may expect some short term sellers come in to squeeze out buyers. Of course if price action consolidates these highs then another leg up is on the cards.
Cryptocurrencies hold gains and edge higher as Bitcoin is currently trading at $9358.5 up 0.98%. Ethereum is at $190.19 up 2.10% and Ripple is currently trading at $0.30090 up 2.54%.
The ASX200 put in another choppy session yesterday as price swung between gains and losses after news broke regarding US tariffs on China and the push from China to drop further tariffs. At the close the index ended up 10.2 points to 6697.1. The Energy and Healthcare sectors were the best performers while the Gold sector came under fire as traders look to move out of safe haven gold on positive trade sentiment. Rising stocks outnumbered declining ones by 555 to 537 and 360 ended unchanged.
The ASX200 is expected to open up 20 points although previous sessions have been the same and found sellers to pressure price lower. Watch for further heavy action from the open if the previous few days are any sign.
ECONOMIC DATA OUT TODAY (AEDT)
NZD Employment Change and Unemployment Rate 8:45am
JPY Monetary Policy Meeting Minutes 10:50am
EUR German Factory Orders 6pm
USD FOMC Member Evans Speaks 12am
USD Crude Oil Inventories 2:30am
SPI200 INTRADAY LEVELS TO WATCH