The Nymex crude oil futures market remains in a downtrend on the daily bar chart. However, the recent low is an area where the oil market has bottomed out in recent years. A drop below the February low of $49.31 would be a bearish omen to suggest another leg down in prices in the near term. My bias: more sideways and choppy trading–barring a major meltdown in global stock markets that may be caused by the coronavirus outbreak intensifying. Stay tuned!–Jim
Daily Morning Report
Coronavirus back on the front burner of marketplace Thursday as illness escalates
Thursday, February 13–Jim Wyckoff’s Morning Markets Report
Asian and European shares were mostly down overnight. U.S. stock indexes are also pointed toward lower openings when the New York day session begins. Risk aversion has returned to the global marketplace late this week, which is benefitting safe-haven assets like gold and U.S. Treasuries.
New cases of coronavirus increased markedly Thursday in China’s Hubei province. There were over 14,800 new cases were reported Thursday in contrast to around 2,000 new cases reported Wednesday. Reports said there were around 240 new deaths in the region. Chinese health officials also widened their definition used to confirm cases. More than 1,300 people have died from the epidemic and the total number of afflicted in the Hubei province stands at over 48,200. The World Health Organization warned the recent reports about the slowdown in the spread of the virus should be treated with “extreme caution.” “This outbreak could still go in any direction,” the WHO said, regarding the status of the outbreak.
China’s businesses are being seriously impacted. There are reports of impending steel shortages and other supply chain disruptions. Auto sales in China are reported down around 20%. Global crude oil demand in the first quarter of this year is forecast to hit the slowest rate of growth in 10 years amid the coronavirus outbreak, according to the International Energy Agency. The IEA said “there is already a major slowdown in oil consumption and the wider economy in China.”
The ebb and flow of this matter as it relates to the marketplace continues—shifting between the front burner and the back burner of the marketplace on any given trading day.
The key outside markets today see crude oil prices weaker and trading around $50.75 a barrel. Meantime, the U.S. dollar index is slightly down in early U.S. trading and not far below this week’s multi-month high.
U.S. economic data due for release Thursday includes the weekly jobless claims report, the consumer price index, and real earnings.
–Jim
Global risk appetite upbeat at mid-week, as stock markets rally
Wednesday, February 12–Jim Wyckoff’s Morning Markets Report
Asian and European shares were mostly higher overnight. U.S. stock indexes are also pointed toward higher openings and near record highs when the New York day session begins. Trader and investor risk appetite is upbeat around the globe at midweek. While the coronavirus outbreak continues to spread, the rate of growth of new cases is slowing. There are now over 1,100 reported dead in China and over 45,000 afflicted. Still, there are reports in Asian countries of supply chains and local commerce being significantly interrupted by the outbreak.
In other overnight news, Euro zone industrial output for December was down 2.1% from November and down 4.1%, year-on-year. Those numbers were worse than expected.
The key outside markets today see crude oil prices higher and trading around $50.70 a barrel. Meantime, the U.S. dollar index is slightly up in early U.S. trading and not far below this week’s multi-month high.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE liquid energy stocks report, and the monthly Treasury budget statement. Federal Reserve Chairman Jerome Powell will testify to the Senate today after speaking to the House Tuesday.
–Jim
Greenback bulls flexing their muscles
The U.S. dollar index is a basket of six major world currencies weighted against the dollar. See on the daily bar chart that the USDX is in a solid uptrend and this week hit a nine-month high. The greenback is being boosted in part of safe-haven demand due to the uncertainty of the coronavirus outbreak, but also on the strength of the U.S. economy. Technicals are bullish for the USDX and there are no early chart clues that a market top is close at hand. Stay tuned!–Jim
Markets on Tuesday less concerned about coronavirus outbreak
Tuesday, February 11–Jim Wyckoff’s Morning Markets Report
Asian and European shares were mostly higher overnight. U.S. stock indexes are also pointed toward higher openings when the New York day session begins. While the coronavirus outbreak continues to spread, it is now spreading at a lower rate of growth of new cases, which has again somewhat assuaged the marketplace Tuesday. There are now over 1,000 reported dead in China and over 42,500 afflicted. On this day the marketplace reckons the spread of the illness is getting under control and that the Chinese government, working with the U.S. and other countries, will keep the outbreak from becoming a pandemic. Traders and investors have been calmed down before on this matter, only to become anxious again. Once again, traders are markets are fickle.
Focus of U.S. traders today will be on the testimony from Federal Reserve Chairman Jerome Powell to a House of Representatives financials services committee. Several other Federal Reserve officials are scheduled to give speeches Tuesday.
The key outside markets today see crude oil prices higher and trading around $50.30 a barrel. Meantime, the U.S. dollar index is slightly weaker overnight after hitting a nine-month high Monday.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the NFIB small business index.
–Jim
Coronavirus and its impact on global economy unclear, but worrisome
Monday, February 10–Jim Wyckoff’s Morning Markets Report
Asian and European shares were mostly weaker overnight as traders and investors have put the coronavirus outbreak back to the front burner of the marketplace. There is not a consensus on the ultimate impact of the virus on the global economy, but worries are not receding. U.S. stock indexes are pointed toward steady to weaker openings when the New York day session begins. Trader and investors attitudes are not panicky and wanting to sell their risk assets, but more a case of not wanting to step in to buy them.
The coronavirus outbreak continues to spread, with over 900 reported dead in China, which surpasses the SARS outbreak that occurred over 15 years ago. The World Health Organization said the coronavirus rate of spread could accelerate. Reports also said some manufacturers in China, especially auto makers, have had to stop their assembly lines due to lack of materials for production. Some analysts are saying the coronavirus outbreak in China will have a more negative impact on the domestic economy than the trade war with the U.S.
In other overnight news, China’s consumer price index was reported for January at up 5.4% year-on-year, which was higher than expected and hit an eight-year high. Food price inflation was reported up 20.6%, year-on-year.
The key outside markets today see crude oil prices weaker and trading around $50.00 a barrel. Meantime, the U.S. dollar index is slightly weaker overnight after hitting a four-month high earlier.
U.S. economic data due for release Monday includes the employment trends index. President Trump’s fiscal 2021 budget is also released today.
–Jim