- U.S.-China expected to sign Phase One of trade deal on Wed, Jan. 15
- Mixed U.S. jobs report have investors second guessing economic outlook
- Earnings season begins
Contracts on U.S. indices advanced with global stocks ahead of the start of another earnings season and leading up to the much-awaited signing of Phase One of the trade deal between the world’s two largest economic superpowers. Haven assets yen and gold dropped along with Treasurys.
U.S. equity futures suggested underlying gauges would rebound from Friday’s setback from all-time highs.
The STOXX Europe 600 Index was volatile, falling after the open with tumbling mining companies offsetting a tech rally, only to rebound and join Asia’s gains.
Most of Asia’s leading indices were in the green, led by Hong Kong’s Hang Seng (+1.08%) and South Korea’s Kospi (+1.04%). Australia’s ASX 200 (-0.37%) was the only major Asian index in the red, dragged down by energy and healthcare shares. The mood among Australian investors seems cautious ahead of the U.S.-China initial trade agreement. Australia is sensitive to developments, as China is its biggest two-way trade partner.
Wall Street took a hit Friday, after Friday’s NFP release provided a mixed picture about the outlook for the U.S. economy, leaving investors second guessing the wave of optimism they’ve been riding lately. The S&P 500 Index suffered its first loss after hitting a new all-time high, as hiring data disappointed expectations with the weakest wage growth in a year. The gauge, nevertheless, locked in gains on a weekly basis on relief around the Mideast situation which could have escalated very quickly.
Technically, closing below Thursday’s low — even after hitting Friday's record high — could be considered a bearish victory. The bulls gave it all they had, yet they were forced back. Both RSI and MACD provide downward trajectories.
10-year yields jumped along with risk-on but both MACD and RSI show them to be still depressed.
Even as the dollar finds resistance at the top of its falling channel since late-Sept., both the MACD and the RSI provide buy signals. We would advise caution and that investors wait for a price breakout.
Bitcoin is forming a pennant continuation pattern after completing a bottom.
Oil suffered its worst weekly drop since July on relief that tensions around the military standoff between the U.S. and Iran have lessened. However, the uptrend line since Oct. 3 holds. Growing civilian unrest after the Iranian government admitted to downing the Ukrainian plane could push the regime into the corner, forcing it to act out, destabilizing the region. The MAC and RSI both provide sell signals.
Up Ahead
- Phase one of the U.S.-China trade deal is set to be signed on Wednesday in Washington.
- The biggest American financial institutions kick off earnings season, including JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS) and BlackRock (NYSE:BLK).
- Fed official Eric Rosengren discusses the economic outlook at an event on Monday.
- The U.S. releases inflation data for December on Tuesday.
- The Fed’s so-called beige book is due on Wednesday.
- China GDP comes on Friday.
Market Moves
Stocks
- The Stoxx Europe 600 Index declined 0.1%.
- Futures on the S&P 500 Index rose 0.3%.
- The U.K.’s FTSE 100 Index climbed 0.3%.
- The MSCI Asia Pacific Index increased 0.4%.
Currencies
- The Dollar Index was little changed.
- The euro was little changed at $1.1124.
- The British pound declined 0.5% to $1.300.
- The offshore yuan strengthened 0.3% to 6.8953 per dollar.
Bonds
- The yield on 10-year Treasuries increased one basis point to 1.83%.
- The yield on 2-year Treasuries gained one basis point to 1.58%.
- Germany’s 10-year yield rose one basis point to -0.19%.
Commodities
- West Texas Intermediate crude declined 0.2% to $58.94 a barrel.
- Gold fell 0.6% to $1,552.44 per ounce.