Wall St. to start little changed ahead of ISM data

Summary:

• US indices consolidate after strong weekly start

• S&P500 attempting to break out of falling channel

• Focus on ISM manufacturing PMI (3PM BST) 

US stocks made a fairly impressive start to the new week with the S&P500 pushing back up near its highest level in a week after Friday’s declines. The main catalyst for the gains seemed to be the firm rebuttal from Navarro on a reported further escalation in US-Sino tension and the markets remains highly sensitive to any headlines on trade going forward. 

Speaking of tensions, the celebrations for the 70th anniversary of the Chinese Communist Party has seen troubles flare up in the Far East once more with an estimated 100,000 people marching in defiance of a police ban. Bloomberg has reported that an activist was shot as violence erupted between police and protestors and since the news broke there’s been a bit of a pullback in US indices to now trade at levels close to where they ended Monday, some 10 ticks from the high of the day.

The S&P500 respected the breakout level around 2945 on the recent dip and is now attempting to break out to the upside from the falling channel that has contained price for the last 3 weeks. Furthermore, the market is now back above both the 8 and 21 EMAs and a clean push up through this falling trendline opens up the possibility for a retest of all-time highs around 3029. Source: xStation 

The main data point to watch this afternoon is the ISM manufacturing PMI due out at 3pm (BST) and how the market reacts to this will go some way to determining whether we get another positive session or not. 4 of the past 5 of these releases have come in worse than expected with the last reading of 49.1 seeing an unexpected drop to below 50. This marked the first month in contraction territory since the September 2016 release. This afternoon the consensus calls for a print of 50.4 for the month of September.