Global stock markets are in full rally mode at mid-week as traders and investors have pushed aside earlier concerns about the coronavirus outbreak in China significantly denting world economic growth. U.S. stock indexes are at or near their record highs. As is many times the case, an unexpected shock to the marketplace is initially deemed by traders as being close to a worst-case scenario and market prices react accordingly. Then, such turns out not to be the case, as is apparently so with the coronavirus outbreak. The U.S. stock index bulls are right back in business and the e-mini S&P bulls are looking for a fresh leg up in prices in the near term—if they can push prices above chart resistance at the present contract high. On a side note, U.S. stock market traders this week are buzzing about the stock price of Tesla, which has soared around 50% since the beginning of January. Some pessimistic stock market watchers are calling Tesla’s move a euphoria that can signal the top in a stock market rally. Stay tuned!–Jim
Daily Morning Report
Global stocks in full rally mode as coronavirus fears fade fast
Wednesday, February 5–Jim Wyckoff’s Morning Markets Report
Global stock markets are in full rally mode at mid-week, as Asian and European shares pushed higher as traders and investors have pushed aside earlier concerns about the coronavirus outbreak in China significantly denting world economic growth. The marketplace is reacting to the rate of spread of the illnesses slowing down, even though total numbers of those afflicted is rising. U.S. stock indexes are pointed toward sharply higher openings when the New York day session begins and are at or near their record highs. As is many times the case, an unexpected shock to the marketplace is initially deemed by traders as being close to a worst-case scenario and market prices react accordingly. Then, such turns out not to be the case, as is apparently so with the coronavirus outbreak.
The marketplace this week sees it as especially encouraging that China’s central bank stepped in an provided significant liquidity to China’s financial system, specifically by reducing short-term lending rates with the influx of funding. The effort was in response to the coronavirus outbreak’s negative impact on China’s businesses.
U.S. stock market traders this week are buzzing about the stock price of Tesla, which has soared around 50% since the beginning of January. Some pessimistic stock market watchers are calling Tesla’s move a euphoria that can signal the top in a stock market rally.
The key outside markets today see crude oil prices higher and trading around $50.75 a barrel. Meantime, the U.S. dollar index is firmer.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ADP national employment report, the international trade report, the U.S. services PMI, the global services PMI, the weekly DOE liquid energy stocks report, and the ISM non-manufacturing report on business.
–Jim
Stock markets picking up steam Tuesday, despite coronavirus outbreak continuing to spread
Tuesday, February 4–Jim Wyckoff’s Morning Markets Report
Asian stock markets rebounded overnight after Monday’s sell-off. European stock markets were also higher and U.S. stock indexes are pointed toward sharply higher openings when the New York day session begins. So far this week trader and investor risk appetites are keener and the marketplace appears to be moving beyond the coronavirus outbreak that continues to spread. Latest counts show over 20,000 Chinese citizens afflicted with over 425 dead, with air travel to China being significantly curtailed and global and domestic business there disrupted.
China’s central bank this week has injected large amounts of money into its financial system to help out domestic businesses that are being hurt by the coronavirus outbreak. This move has helped to assuage Asian investors.
In other overnight news, the Euro zone producer price index in December was reported unchanged from November and down 0.7%, year-on-year. Those numbers were in line with market expectations.
The markets took in stride the highly anticipated Iowa presidential caucuses that have yet to declare a Democratic winner, due to technological issues with the vote count.
The key outside markets today see crude oil prices firmer and trading around $50.75 a barrel. Meantime, the U.S. dollar index is slightly higher on some follow-through strength after good gains posted Monday.
U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the ISM New York report on business, the IBD/TIPP economic optimism index, and manufacturers’ shipments and inventories.
–Jim
Nymex crude oil showing signs of bottoming out
The crude oil market has been pounded lower by the coronavirus outbreak. Has the outbreak nearly run its course, from an overall markets-impact perspective? While it’s too early to tell for sure, it appears the oil market has, or is close to, bottoming out. See on the daily bar chart for March Nymex crude oil futures the steep price downdraft that is now overdone on the downside. The Relative Strength Index at the bottom of the chart shows the lowest (oversold) reading since last summer, at which time oil prices also put in a near-term low. And if oil prices have indeed bottomed out, other raw commodity markets that have been hit by the coronavirus outbreak may also be doing the same. Stay tuned!–Jim
Global markets still grappling with what impact of coronavirus will have on global economy
Monday, February 3–Jim Wyckoff’s Morning Markets Report
Asian stock markets were lower overnight, led by sharp losses in mainland China stocks as those markets reopened for the first time in over a week, due to the Lunar New Year holiday last week. The Shanghai stock index lost nearly 8% on the day—the biggest drop in 4.5 years. European stock markets were mostly up and U.S. stock indexes are pointed toward higher openings when the New York day session begins.
The coronavirus outbreak in China that has spread to other parts of the world remains in focus early this week. Latest counts show 17,500 Chinese citizens afflicted and over 350 dead, with air travel to China being significantly curtailed and global and domestic business there disrupted. It’s been an up-and-down daily trading affair for markets the past two weeks, regarding the coronavirus outbreak. Judging from the European and U.S. stock markets’ gains Monday, at least on this day the present situation appears to be factored into market prices.
In other Asian news, Hong Kong’s economy contracted by 1.2% in 2019, the first negative growth rate in over 10 years. Civil unrest and a global trade slowdown hurt that city’s economy.
In the Euro zone, the January manufacturing purchasing managers’ index (PMI) came in at 47.9, which was slightly better than expectations, but still a reading below 50.0 that suggests a contraction in the sector.
The U.K. has officially exited from the European Union as of last Friday. The British pound saw some pressure as the U.K. and Euro zone officials begin transition talks.
The key outside markets today see crude oil prices modestly up and trading around $51.80 a barrel. Reports overnight said Saudi Arabia is mulling a “drastic” temporary oil-production cut due to the coronavirus outbreak. OPEC ministerial officials may meet this week to discuss the matter. Meantime, the U.S. dollar index is higher on a corrective bounce from solid losses seen last Friday.
U.S. economic data due for release Monday includes the U.S. manufacturing purchasing managers’ index (PMI), the ISM manufacturing report on business, construction spending, domestic auto industry sales and the global manufacturing PMI.
–Jim
Risk aversion back in play as coronavirus fears rise
Friday, January 31–Jim Wyckoff’s Morning Markets Report
This last trading day of the week and of the month finds Asian and European stock markets mostly lower. Mainland China markets remain closed for the Lunar New Year holiday. U.S. stock indexes are pointed toward lower openings when the New York day session begins.
The coronavirus outbreak is back on the front burner of the global market place Friday. Risk aversion is in order on this day as the outbreak has around 10,000 Chinese afflicted and over 210 have died. The World Health Organization is now calling the outbreak an emergency. Add the U.K. to the growing list of countries that have reported the many are calling the “Wuhan virus.” The impact on global economic growth is in question, but nobody has a clear answer at present, as the situation continues to play out.
It’s been an up-and-down trading affair the past week regarding the coronavirus outbreak. One day the marketplace deems the outbreak as overblown and then next day it deems the situation as serious and escalating. The uncertainty of the matter has hit the raw commodity sector hard, led by crude oil prices dropping over $12.00 a barrel from the January high. Safe-haven gold prices have benefitted from the keener anxiety, but it’s also been a choppy trading affair.
In other dour economic news, the European Union collective economy grew a paltry 1.2% in 2019, it was reported Friday, which is the slowest pace in six years. A slumping EU auto sector was partly to blame.
The key outside markets today see crude oil prices modestly up and trading around $52.50 a barrel. Meantime, the U.S. dollar index is slightly higher. The USDX hit a two-month high earlier this week.
U.S. economic data due for release Friday includes personal income and outlays, the employment cost index, the ISM Chicago business survey and the University of Michigan consumer sentiment survey.
–Jim