Volatile trade in US indices after dual boost from ECB and trade

3:52 PM September 12, 2019

Summary:

  • Stocks volatile and headline-driven

  • US indices rally on trade breakthrough and ECB stimulus

  • S&P500 within 0.5% of all-time high

 

It’s been a good day for positive news as far as stock investors are concerned with with positive developments on the US-China trade front and the announcement of a significant stimulus package from the ECB causing a flurry of buying activity. However, the gains have been pared back somewhat in the past hour or so and the sharp drop from 6-week highs seen in the Dax will stir some memories of the declines that ensued after the July ECB meeting. Those reminiscing about the move seen back in the summer will be watching the price action closely for the rest of the day with a red close potentially marking an interim peak for equities after what has been an impressive couple of weeks.

The Dax has been typically volatile since the ECB rate decision was announced. The market has carved out a range of around 170 ticks from low to high and a move below daily lows of 12305 could be seen as an ominous sign for US indices. Source: xStation  

 

The S&P500 surged overnight on the news that the US will delay the implementation of tariffs by 2 weeks till the middle of October in what is the first tangible sign of progress on the trade front in some time. This caused the market to accelerate higher and smash through the 3000 mark, peaking at 3019.5 - just 10 ticks from the all-time high set back in July. This peak was seen just the day after the July ECB meeting, and the adverse reaction will still be fresh in the memories of bulls. 

 

In the past hour there’s been more news on the trade front with Bloomberg reporting that Trump is considering an interim China deal to delay tariffs. This caused another push higher in risk assets and adds another sharp move to an already volatile day. The reported deal would delay and even roll back some tariffs for commitments on IP and agricultural purchases and cites 5 sources. 

It’s been a bumpy ride in US futures today with several sharp moves on news headlines. At the time of writing the market is trading firmly higher once more and is only around 0.5% from its all-time high. Source: xStation

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