Friday, May 22–Jim Wyckoff’s Morning Markets Report
Global stock markets were also mostly lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. Traders and investors are more risk averse on this last trading day of the week and heading into a three-day U.S. holiday weekend. The Covid-19 pandemic is seeing an alarming rise of cases in some countries, while North America and Europe appear to be “flattening the curve” of the rate of infections. U.S.-China tensions remain high. A new geopolitical element thrown into the mix is China’s threat to impose new national security laws in Hong Kong to thwart protesters there. Hong Kong’s main stock index, the Hang Seng, saw its worst day in nearly five years Friday—down over 5%.
China began its most important political event of the year late this week, the National People’s Congress. At the meetings Friday, Chinese officials said they won’t issue guidance on 2020 economic growth, acknowledging the severe economic damage inflicted on the world’s second-largest economy. Chinese authorities also implied that any more monetary policy stimulus may not be in the works, suggesting more pain for Chinese consumers. This news spooked the global marketplace and helped to sink stock markets and the crude oil markets.
The important outside markets see the U.S. dollar index solidly up early today on safe-haven demand. Nymex crude oil prices are sharply lower and trading around $32.00 a barrel. The yield on the benchmark U.S. Treasury 10-year note is currently around 0.67%.
There is no major U.S. economic data due for release Friday.