3 Things You Need to Know About the Market Today: Extended Trade Truce?, Economic Worries, Late Earnings
1, 60-Day Extension to the Trade Deadline?
USD/CNH, 4-Hour Chart Analysis
The extension of the March 1 deadline for the US-Chinese trade deal is getting closer as we expected, and the rumors are now specifically pointing to a 2-month extension. Given the weakening Chinese growth and president Trump’s falling approval rates, some kind of agreement is very likely in the coming weeks, and it seems that the additional tariffs will be off the table for good.
Chinese President Xi will reportedly join the talks tomorrow, and it will be interesting to see how the two sides will the current round of the talks. Should they announce a date for the much-awaited second meeting between Xi and Trump, risk assets could get yet another boost, but the “trade-optimism” trade will likely be exhausted afterward.
Global risk assets continued to grind higher amid the trade-related optimism, and despite the worrying economic trends in Europe and China. The Dollar’s appreciation, the US stock markets relative strength, and the broad bearish shift in the majority of the key markets remain the dominant trends. For that to change we would need a tectonic change in the underlying data, so investors should remain cautious with the relatively weak markets.
2, German Economy Stalls as US Retail Sales Disappoint
DAX 30 Index CFD, 4-Hour Chart Analysis
One would need to look really closely to find something upbeat in the recent batch of European economic numbers, and today the German GDP and Wholesale Prices both added to the fears regarding an impending recession. The powerhouse of the Eurozone reported flat growth for the previous quarter, slightly missing the consensus estimate of 0.1%, while wholesale prices unexpectedly fell by -0.7%, confirming the soft aggregate demand.
In the US, we had the December Retail Sales number coming out with a more than 1-month delay due to the government shutdown, and the Producer Price Index (PPI) was also released one day after the mixed CPI report. Retail Sales were very week in the crucial holiday season, with both the headline and the core measure missing estimates by a mile.
The headline PPI measure was also lower-than-expected, while the more reliable core indicator slightly beat the consensus estimates. Stocks turned sharply lower following the reports, while the Dollar also pulled back slightly against its major peers.
3, Last Hurray of the Earnings Season
COCA-COLA, 4-Hour Chart Analysis
The two-faced US earnings season, which featured decent Q4 numbers and weakening prospects for the current quarter, is almost over but today we will get the reports of a few key companies. Coca-Cola (KO) already published its numbers, and the beverage giant’s report was perfectly in line with the trends. The firm posted solid earnings, but warned of a possibly challenging quarter, with demand woes and forex risks weighing on the outlook.
Coca-Cola fell by more than 4% in yesterday ahead of the report, but given the stocks relative strength in recent months, it’s is still in a commendable technical position, currently being flat in pre-market trading, while Duke Energy (DUK) is also slightly lower after publishing its numbers earlier on.
The second major firm of the day, NVIDIA (NVDA) will report after the bell, and bulls will be looking for anything to cause a meaningful bounce in the share following the more than 50% rout at the end of last year.
Major Stock Indices
S&P 500 Futures, 4-Hour Chart Analysis
Nasdaq 100 Futures, 4-Hour Chart Analysis
Dow 30 Futures, 4-Hour Chart Analysis
VIX (US Volatility Index), 4-Hour Chart Analysis
FTSE 100 Index CFD, 4-Hour Chart Analysis
EuroStoxx50 Index CFD, 4-Hour Chart Analysis
Nikkei 225 Futures, 4-Hour Chart Analysis
Shanghai Composite Index CFD, 4-Hour Chart Analysis
EEM (Emerging Markets ETF), 4-Hour Chart Analysis
EUR/USD, 4-Hour Chart Analysis
USD/JPY, 4-Hour Chart Analysis
GBP/USD, 4-Hour Chart Analysis
EUR/GBP, 4-Hour Chart Analysis
AUD/USD, 4-Hour Chart Analysis
WTI Crude Oil, 4-Hour Chart Analysis
Gold Futures, 4-Hour Chart Analysis
Copper Futures, 4-Hour Chart Analysis
Featured image from Shutterstock