Summary:
-
US stock markets to open lower after long weekend
-
Are Copper prices sending a warning sign?
-
ISM manufacturing due at 3PM (BST)
The NYSE and NASDAQ are both set to open this afternoon for the first time this week after remaining closed on Monday to celebrate Labour day. The return of the US may add some greater volume with the US indices drifting back and forth in recent trade. The broader range for both the S&P500 (US500 on xStation) and the NASDAQ 100 (US100 on xStation) continues to be respected while the break higher in the Dow Jones (US30 on xStation) on Friday appears to have been false.
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile appThe NASDAQ index remains in the broader range from 7375-7790 but has recently moved below the H1 cloud. This could be seen as suggesting the near-term trend has turned lower although a move above 7670 could be seen to negate this. Source: xStation
There are a myriad of different factors that can impact US stock futures with traders often looking at many other markets to take their cues. One such market is Copper, AKA Dr. Copper, due to the industrial metal being seen as a proxy for building activity. The logic follows that a strong economy would see greater demand for building, and there Copper, while at the same time supporting the stock market. Whilst the correlation between the S&P500 and Copper has varied significantly over time, and therefore there can be prolonged divergences, whenever these divergences get particularly marked it can show that something is not quite right.
For instance the rally seen for much of 2017 in stocks was led by rising Copper prices. In addition, Copper sold off strongly from June 2018 until the end of Summer whilst the S&P500 continue to follow a path higher. However this divergence became gaping by last Autumn and there was a subsequent decline in US stocks. We’ve seen an even larger divergence appear in recent months and with Copper falling today to its lowest level in more than 2 years, this could be seen as an ominous sign for the S&P500.
There’s a big divergence opening up between Copper and US stocks, with the former falling to its lowest level in more than 2 years while the latter remains not far from record highs. Source: xStation
On the economic data front, the latest look at the US manufacturing sector cold well shape the forthcoming session for stocks with the ISM PMI release at 3PM expected to see a reading of 51.2 - inline with the prior month.
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.