3 Things You Need to Know About the Market Today: Xi’s Surprise, US Inflation, Shutdown Saga
1, Chinese President Xi to Join Trade Talks in Beijing
Shanghai Composite Index CFD, 4-Hour Chart Analysis
Global stocks markets are higher once again today ahead of the US session, boosted by the continued trade-related optimism. The news that Chinese President Xi will unexpectedly attend the current round of US-Chinese trade talks lifted stocks across the globe.
The high-level meeting, which will be highlighted by Treasury Secretary Mnuchin from the American side, just got even more important. Xi’s visit shows the willingness of the Chinese side to reach an agreement, which would also be great for the Trump administration following the unpopular government shutdown.
Chinese stocks extended their post-holiday winning streak and the Shanghai Composite hit its highest level since early-October, riding the trade-optimism wave. From a broader perspective, the bear market in Chinese equities is clearly intact, and despite the current positive sentiment, the economic and technical headwinds remain strong.
2, US Consumer Inflation Slows but Dollar Turns Higher Again
EUR/USD, 4-Hour Chart Analysis
In light of the recent “strongly data-dependant” shift in the Federal Reserve’s stance, all eyes were on the US Consumer Price Index report today in pre-market trading. Although the headline number came in flat, well below the consensus estimate of 0.2%, the more reliable core measure matched the forecast, printing at 0.2%.
Treasury yields turned significantly higher after the mixed report, and the Dollar, which pulled back following 8 days gains yesterday, also rallied strongly. The EUR/USD pair, which was already under pressure following the worse-than-expected Eurozone Industrial Production number, is now back near the notorious support zone near the 1.13 level. The support zone held up for months now, but given the long-term technicals, a sharp break-down could be ahead.
Elsewhere in the forex segment, the Pound’s whipsaw and the New Zealand Dollar’s surge made waves, although markets remained relatively quiet. While the GBP initially gained ground thanks to the global risk rally, following the worse-than-expected British CPI and PPI indices the currency erased its gains, and its trading near its three-week lows due to the Brexit-related uncertainty.
3, Government Shutdown Avoided for Good?
Dow 30 Futures, 4-Hour Chart Analysis
The major US indices are also up just after the opening bell, with the Dow, the Nasdaq, and the S&P 500 all trading on marginal new recovery highs. The reports that Donald Trump will likely accept yesterday’s tentative border security deal, despite being unhappy about it boosted investor confidence on Wall Street.
The President is considering an executive order to secure additional funding for his controversial Wall, as in the deal would only allocate a small amount to a short “barrier” which is a far cry from Mr. Trump’s original plans. Should the President actually sing the bill, a second government shutdown would finally be off the table, but besides a trade deal with China, it will hard to find a positive catalyst for US stocks at these levels, given the looming earnings recession and the global economic slowdown.
Major Stock Indices
S&P 500 Futures, 4-Hour Chart Analysis
Nasdaq 100 Futures, 4-Hour Chart Analysis
VIX (US Volatility Index), 4-Hour Chart Analysis
DAX 30 Index CFD, 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
EEM (Emerging Markets ETF), 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