Summary:
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US indices mixed to lower after recent gains
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Trump with positive comments on China but Navarro back in meeting
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More soft data on the housing front
After a strong day of gains largely thanks to Fed chair Powell, today’s trade for US equities has been fairly subdued with the major indices consolidating after the large rally. The market seems to remain focused on trade ahead of the G20 meeting with a couple of stories hitting the wires this afternoon which have caused sharp moves. Firstly US president Trump was reported by Reuters as claiming that the US was “close to doing something with China on trade” before adding the caveat that he’s not sure if he wants to do it.
This caused a spike higher in the market but as traders realised this wasn’t anything new and stopped short of offering any concrete developments they rushed to sell the market back and it has since fallen to its lowest level of the day. Just a few minutes after the Trump remarks, there were reports that trade hawk Peter Navarro would be attending the dinner between Trump and Xi and this could be seen as negative and meaning that a deal is less likely.
The US500 spike higher on the Trump comments but this bid was swiftly hit and the market has subsequently fallen to its lowest level of the day. Source: xStation
Just before the comments from Trump there was some second tier data from the US with the most recent housing numbers showing more softness in the sector. The number of pending home sales fell to -2.6% M/M - it’s lowest level since January and well below the 0.5% expected. In Y/Y terms it wa also a disappointment with a decline of 4.6% worse than the -2.8% expected. NAR economists Lawrence Yun blamed higher mortgage rates for the jump and the release comes not long after we got the new home sales data for October which was the weakest since March 2016.
Housing data has softened lately, suggesting that the sector may be slowing down. Pending home sales declined by 2.6% in the past month. Source: Bloomberg
The US500 has respected prior resistance from 2740-2748 after the region put a cap on the recent gains. Source: xStation
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