Summary:
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US indices green ahead of cash open
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Stocks look to recover from Friday’s rout
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S&P500 back above 2890
There have been further signs of recovery in US stock futures ahead of the opening bell on Wall Street this afternoon with the major benchmarks all set to start in the green. Monday’s session saw the markets manage to post a higher close after Friday’s carnage where a tweetstorm from US president Trump spooked investors. Things looked like they could take a turn for the worse over the weekend with further inflammatory remarks from Trump, but after dropping to news lows on the globex open the market managed to end around 1% higher than where it was last week.
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The S&P500 is back at the 61.8% fib retracement around 2891 of the declines. A clean break above here could see a further recovery ensue. Source: xStation
The catalyst for this attempted recovery seems to lie in some more upbeat remarks on trade from both Trump and China, but it should be noted that there are yet to be any concrete developments. Trump has claimed to have had constructive phone calls with Beijing but these as of yet can’t be confirmed. What is clear is that Trump appears to be losing power in his negotiating position and if he has already decided to soften his stance due to Friday’s declines then the “Trump put” is being bought ever more eagerly. The real concern is if markets fail to hold up despite a softening of rhetoric from Trump, which would spell bad news indeed.
This morning there were gains seen across Europe after reports that China’s State Council had announced that they were considering relaxing or removing restrictions on auto purchases. China said it will encourage credit support for purchases of new energy vehicles and smart home appliances. Another aspect for US stock traders to keep an eye on is the daily midpoint fixed of the Chinese yuan, with there being some suggestion that the country’s central bank could be trying to short up the renminbi. While the latest fix against the US dollar of 7.0810 was the weakest in more than a decade it was above the 7.1055 level that the market was expecting - according to Reuters.
For the best part of a month the S&P500 has been in a range that can be loosely defined by the 50 and 200 day SMAs. A clear break above 2945 would put an end to this in a bullish whilst a daily close below 2823 (or intraday move below 2776) would be welcomed by bears. Until then, the range remains in tact. Source: xStation
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