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Opening Bell: Stocks Err On Side Of Caution Amid Mixed Earnings, Brexit Vote

Published 10/22/2019, 05:08 AM
Updated 09/02/2020, 02:05 AM

  • U.S. futures give up Monday's trade-driven gains
  • European shares inch cautiously higher amid mixed earnings, first round of U.K. Parliament votes on final Brexit bill
  • Yen, gold, Treasurys climb, signaling risk-off

Key Events

Futures on the S&P 500, Dow and NASDAQ 100 stood in caution territory and European shares hovered mildly in the green this morning, amid a batch of mixed corporate results and ahead of a first round of Brexit votes in the U.K..

STOXX 600 Daily Chart

The STOXX 600 initially slipped lower with food and household goods shares, wiping out most of yesterday’s advance, which had hit the highest close since May 22 2018.

Both European and U.S. equities had leaped forward on Monday on positive trade sentiment, after U.S. President Donald Trump and White House adviser Larry Kudlow struck an optimist note on the state of negotiations with China.

Technically speaking, the pan-European benchmark has been suppressed for a week below the top of a broadening pattern—similar to the one seen on the S&P 500. On the other hand, it may be forming a falling flag, bullish after the 4% jump in just five preceding sessions. A completion with an upside breakout may be the catalyst to blowing out the massive broadening pattern since April.

In the earlier Asian session, South Korea’s KOSPI (+1.16) outperformed on trade optimism. The index has become a proxy on global trade as the domestic market was placed in the uncomfortable position of being forced to choose between the U.S. and China in their strive for dominance. Japan, South Korea’s trade opponent, was closed for a holiday.

Global Financial Affairs

Meanwhile, safe-haven assets strengthened, conveying the picture of a risk-off market.

UST Daily Chart

Yields on 10-year Treasurys erased nearly half of yesterday’s gains, which had helped them close above a symmetrical triangle for the first time since mid July. Rates appear to have found resistance by the Oct. 17 shooting star highs and the 100 MA. The symmetrical triangle developed below the downtrend line since November 2018.

USD/JPY Daily Chart

The Dollar Index was little changed but fell against the yen, paring much of yesterday’s advance, which had followed a three-day slide. Technically, however, the pair is developing a falling flag, bullish after the five-day advance that preceded it, within a short-term rising channel. The flag formed below the 200 DMA. An upside breakout would suggest the USD/JPY would test the 110.00 level, the downtrend line since October 2018.

The pound retreated amid the continued tug of war between British Prime Minister Boris Johnson and Parliament on passing his Brexit deal. The official Withdrawal Agreement Bill, published in the European evening on Monday, will finally be put to vote later on Tuesday, with the view of wrapping up its journey through Parliament in a three day timeframe.

Except for yesterday’s limited setback, cable climbed for the previous four consecutive days, or for six days out of seven, amid hopes of a final breakthrough.

Gold edged higher but trimmed a more marked ascent, where it pared most of yesterday’s loss even against a steady dollar.

Crude also gained ground.

Up Ahead

Market Moves


  • The U.K.’s FTSE 100 declined 0.1%.
  • Sweden’s OMX Stockholm 30 climbed 0.2%.
  • The MSCI Asia Pacific Index gained 0.3%.
  • Currencies

  • The Dollar Index was little changed.
  • The British pound was steady at $1.2965.
  • The euro was little changed at $1.1147.
  • The Indian rupee gained 0.4% to 70.859 per dollar.
  • The Japanese yen climbed 0.1% to 108.55 per dollar.
  • Bonds

  • The yield on 10-year Treasurys declined two basis points to 1.78%.
  • Britain’s 10-year yield dipped two basis points to 0.734%.
  • Italy’s 10-year yield fell three basis points to 0.953%.
  • New Zealand’s 10-year yield advanced five basis points to 1.343%.
  • Commodities

  • West Texas Intermediate crude slid 0.2% to $53.21 a barrel.
  • Gold gained 0.2% to $1,487.40 an ounce.
  • Arabica coffee climbed 0.7% to $0.96 a pound.
  • Corn fell 0.3% to $3.86 a bushel.
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