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Market Update: U.S. Stock Futures, Commodities Rise on Independence Day

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U.S. stock futures edged higher Wednesday in a holiday-shortened session, though losses continued to mount in Asian markets as trade tensions remained in focus.

Futures Rise

Dow Jones futures were up 38 points by the close, settling at 24,201.00. The blue-chip index headed lower on Tuesday, with Nike (NKE) and Apple (AAPL) among the biggest losers.

The S&P 500 futures contract for September settlement rose 8.50 points to 2,721.75.

Meanwhile, the Nasdaq 100 mini futures contract gained 18.75 points to 7,042.50.

The New York Stock Exchange was closed on Wednesday for the Independence Day holiday. Normal trading hours are set to resume Thursday morning.

Wall Street is currently mired in one its most difficult five-month stretches in recent memory, with the S&P 500 and Dow just days away from setting a bearish record. It has been more than 100 days since the major indexes recorded a new record, marking the longest correction since 1984.

The so-called Trump reflation trade was disrupted in early February after a U.S. jobs report triggered fresh fears over rising inflation. Those fears have continued to build over the past few months as the Federal Reserve embarked on a faster rate-hike cycle. Compounding inflationary risks are fears of an all-out trade war between the United States and its key allies. This is the narrative that U.S. investors will return to on Thursday once the holiday ends.

Global Markets on Edge

Wednesday trading was marked by heavy volatility in global equity markets, with Chinese stocks suffering the biggest losses. Mainland China’s CSI 300 Index fell 1.3% to 3,363.75, its lowest since March 2016. In Hong Kong, the Hang Seng Index fell 1.1% to 28,241.67.

Chinese stocks are falling ahead of the planned imposition of U.S. tariffs on Friday. Up to $50 billion worth of Chinese goods will be impacted by the levies, with the Trump administration threatening more tariffs if Beijing responds.

European markets traded mixed on Wednesday, with the Euro Stoxx 50 Pr gaining 0.2% to 3,412.03. However, major indexes in London and Germany finished lower for the day.

Commodities Rise

Crude oil resumed its upward trajectory mid-week as investors braced for a global shortfall in supplies emanating from U.S. sanctions on Iran. Inventory data from the American Petroleum Institute (API) also helped to shore up crude prices.

API reported an inventory shortfall of 4.5 million barrels in the latest week following an even bigger draw of 9.23 million barrels the week before. Declining inventories are normally bullish from the perspective of oil prices.

U.S. West Texas Intermediate (WTI) for August settlement rose 19 cents, or 0.3%, to close at $74.33 a barrel. Nymex crude briefly traded above $75 on Tuesday for the first time since 2014.

Brent crude, the international futures benchmark, gained 48 cents, or 0.6%, to $78.24 a barrel.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 743 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Market Overview

U.S. Stock Futures Fall on Brexit, China Growth Woes; Lifeless Crypto Market Drift Sideways

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U.S. stock futures declined on Monday, as concerns over Brexit and the health of China’s economy weighed on investors’ sentiment. Crypto markets were largely uneventful following a sudden correction early Sunday.

Stock Futures Falter

Futures tied to the Dow Jones, Nasdaq and S&P 500 Index finished lower in holiday trading. The Dow Jones mini futures contract fell 72.00 points to 24,615.00. The March contract for Nasdaq futures declined 31.25 points to 6,761.50. S&P 500 mini futures closed down 8.25 points at 2,663.25.

U.S. markets were closed on Monday for Martin Luther King Jr. Day. The New York Stock Exchange and Nasdaq will resume regular trading hours on Tuesday.

European equity markets were also down on Monday. The Euro Stoxx 50 Pr declined 0.3% to 3,125.07. Bourses in Frankfurt, Paris and Madrid declined by at least 0.2%. London’s FTSE 100 Index broke even in the final moments of Monday’s session.

China, Brexit in the Spotlight

Concerns about the global economy resurfaced Monday after China reported the slowest pace of annual growth in nearly three decades. Gross domestic product (GDP), the value of all goods and services produced in the economy, grew 6.6% annually, the slowest since 1990. In the fourth quarter, China’s annual growth rate slipped to 6.4%.

The International Monetary Fund (IMF) has once again revised down its estimate for global growth, warning that the synchronized global recovery was losing steam. The Washington-based lending institution now expects global GDP to grow 3.5% in 2019 and 3.6% in 2020. That’s down from the October estimate of 3.7% for both years.

Another form of instability comes from the United Kingdom, which is still grappling with how to proceed on the issue of Brexit. Prime Minister Theresa May on Monday unveiled a new Brexit plan after her initial bill was shot down by British Parliament last week. A vote on the so-called Brexit Plan B is scheduled for Jan. 29.

Crypto Markets Drift Aimlessly

The cryptocurrency market saw little movement on Monday, as a lack of conviction from the bulls and the bears kept price action subdued. Tron was the notably exception among the major cryptocurrencies, gaining 5.1% to $0.0250.

Bitcoin’s price was little changed over the 24-hour cycle and was last seen trading at $3,583.44. The largest cryptocurrency by market cap dropped 4% on Sunday after gaining nearly 3% during the previous session.

Altcoins and tokens traded in a similar fashion at the start of the week. XRP edged up 0.3% to $0.3196. Ethereum fell 1% to $117.79. Bitcoin cash, EOS and Stellar XLM were little changed during the session.

The combined crypto market cap held below $120 billion on Monday.

In terms of news, Ethereum’s developer communication has announced that the highly-anticipated Constantinople hard fork will take place Feb. 27. The rollout, which was originally scheduled last week, was delayed after developers identified a major security flaw in one of the Ethereum Improvement Proposals (EIP).

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 743 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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Analysis

3 Things You Need to Know About the Market Today

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1, Chinese GDP Growth Slows to Multi-Decade Low

Shanghai Composite, 4-Hour Chart Analysis

When even the strongly PR-optimized Chinese economic releases are showing severe weakness, it’s not at all surprising that the local stock market is in a deep bear market, and even the explosive oversold rally on Wall Street combined with the trade optimism of last week is not enough to meaningfully change the technical setup.

While economic growth slowed to an almost 30-year low on a yearly basis, retail sales and industrial production beat the consensus estimates by a hair, but that wasn’t enough to cause a material rally in equities, with the global sentiment leaning slightly bearish. This week’s most important question will be how risk assets will hold on to their recent gains, with a special attention on China and Europe, which continue to lag behind the US from a technical perspective.

The Shanghai Composite is more than 30% below its bull market highs, while the main European benchmarks are also around 20% below their respective highs, and that’s following one of the strongest short squeezes in history on Wall Street, mind you. The next few days could be crucial for markets, and we now advise caution even for short-term bulls.

2, Stocks Retreat after Friday Ramp with Wall Street Closed

German DAX 30 Index, 4-Hour Chart Analysis

Looking at Europe, the major indices failed to extend their gains from Friday, while US stock futures are also modestly lower after the European close. With the US markets being closed in observance of the Martin Luther King Jr. Day, trading volumes and activity has been predictably low, and things will likely get heated tomorrow, as the earnings season will also continue.

Johnson & Johnson (JNJ) and IBM (IBM0 will report earnings tomorrow, and all eyes will be on their overseas numbers and guidance amid the global economic slowdown. We had some negative reports regarding the US-Chinese trade talks, concerning the sensitive issue of Intellectual Property, and we still think that even though an agreement is likely in the coming months, implementation and enforcement will be borderline impossible.

3, Oil Tests December High

WTI Crude Oil, 4-Hour Chart Analysis

While risk assets, in general, had a slightly bearish half-session crude oil kept on pushing higher following Friday’s move to new correction highs, with the WTI contract entering the resistance zone that capped the December consolidation. The crucial commodity, which has been slightly lagging US stocks from a technical perspective is still squeezing late shorts, but we expect a short-term top very soon, possibly after a stop hunting rally above the $55 per barrel level.

What’s sure, is that we wouldn’t be buyers at these levels, even in light of the OPEC production cut, since over-supply remains a major issue, and the increase in US output continues. That said, the short-term uptrend is intact and the topping process could take a while, but we will keep a close eye on the day-to-day price action following the 25% rally off the December lows.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 444 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

European Stocks Decline as China’s Economic Growth Hits 28-Year Low

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European stocks traded lower on Monday amid news that China’s economic expansion reached its slowest pace in nearly three decades, casting a dark shadow over the health of the global economy.

Europe Sees Red

All of Europe’s major stock indexes traded lower in the afternoon session. The pan-European Stoxx 600 fell 0.3%, reflecting weakness across the continent.

Germany’s benchmark DAX Index fell 0.6%. In Paris, the CAC 40 Index languished 0.2%. Spain’s IBEX 35 Index also dropped 0.2%. The FTSE 100 Index in London pared losses to trade flat.

The weak European session followed strong gains in Asia, where traders remained optimistic about China’s new stimulus plan. Last week, the Chinese government pledged to lower taxes and increased federal expenditures in 2019 as a way to shore up economic growth. Meanwhile, the People’s Bank of China (PBOC) said it will make monetary policy easier to gauge moving forward.

Drama surrounding Brexit also weighed on European stocks as British Prime Minister Theresa May prepared to unveil a new plan to withdraw from the EU. May’s Brexit bill was shot down in British parliament last week. A parliamentary bloc tried to oust her from power by forcing a no-confidence vote that the prime minister subsequently survived.

British lawmakers will vote on May’s Plan B on Jan. 29. According to early reports, the new plan is unlikely to be much different than the previous bill tabled to parliament.

China’s Economic Headwinds

The Chinese economy is coming off its slowest year of growth since 1990, a warning sign for investors banking on continued global expansion. The world’s second-largest economy grew 6.6% in 2018, in line with expectations but a substantial drop compared with previous years.

China’s economic grew 6.4% annually in the fourth quarter, which is an extension of a downtrend that began to emerge roughly five years ago.

Retail sales grew 8.2% annually in December, slightly higher than the November rate. During the same month, industrial production picked up to 5.7% annually, up from 5.4% in November. Annual fixed asset investment was unchanged at 5.9%.

Beijing is prepared to make big concessions in its ongoing trade negotiations with the United States. As CCN reported Friday, China has offered to completely eliminate its trade surplus with Washington by purchasing an additional $1 trillion in American-made goods. The additional purchases will be made over a six-year period.

Last year, China’s trade surplus with Washington amounted to $323 billion.

Talks between the two superpowers are expected to continue over the next six weeks as negotiators look to get a deal done during the 90-day truce period. President Donald Trump and Chinese Xi Jinping agreed to de-escalate trade hostilities during a face-to-face meeting in Argentina in early December.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 743 rated postsSam Bourgi is Chief Editor to Hacked.com, where he leads content development for one of the world's foremost cryptocurrency resources. Over the past eight years Sam has authored more than 10,000 articles and over 40 whitepapers in the fields of labor market economics, emerging technologies, cryptocurrency and traditional finance. Sam's work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Contact: sam@hacked.com Twitter: @hsbourgi




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