Daily Morning Report

Friday, January 3–Jim Wyckoff’s Morning Markets Report

An extended period of geopolitical calm was shattered overnight when the U.S. conducted a military air strike in Baghdad, Iraq that killed a top Iranian general along with an Iraqi paramilitary leader. The U.S. said Iran was planning to kill Americans in the Middle East. The strike also comes after the major attack on a Sauid oil installation a few months ago, in which the U.S. blamed Iran. Iran promised harsh retaliation.

Global stock markets plunged on the news and U.S. stocks are set to open the New York day session with strong losses. Gold prices shot higher and hit a four-month high, presently trading around $25 higher, while other key outside markets today see crude oil prices spiking, hitting a 10-month high and presently trading around $2.50 higher at near $63.50 a barrel. The U.S. dollar index continues its rebound from this week’s multi-month low and is trading moderately up on the day.

The keen uncertainty regarding this situation, including how Iran will respond, is likely to keep the global marketplace on edge for some time to come. China has urged both the U.S. and Iran to use restraint, as China and the U.S. are set to sign a partial trade deal on January 15.

The U.S. military action against Iran overshadows a very busy day for U.S. economic data, including the afternoon release of the FOMC minutes from the last meeting. Traders and investors will glean the FOMC minutes for clues on the future direction and timing of U.S. Federal Reserve monetary policy. Other U.S. economic data due for release today includes the ISM New York report on business, the ISM manufacturing report on business, construction spending, the weekly DOE liquid energy stocks report and domestic auto industry sales.

–Jim

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Thursday, January 2–Jim Wyckoff’s Morning Markets Report

Asian and European stock indexes were mostly firmer overnight. The U.S. stock indexes are also pointed toward higher openings and at or near record highs when the New York day session begins, on this first trading day of 2020.

Trader and investor attitudes remain upbeat, due in large part to the world’s two largest economies, the U.S. and China, seeing a major thaw in the more-than-two-year-old trade war that has slowed global economic growth. A partial trade deal is set to be signed on January 15th.

China’s central bank eased its monetary policy on Wednesday by lowering its banks’ reserve requirement ratios, which will put more money into China’s financial system. That news also worked to boost world equity markets.

The was major protesting in Hong Kong to start the new year, with reports saying more than 400 civilians were arrested and police using pepper spray and water cannons. This matter could again become a front-burner issue for the marketplace, especially if mainland China gets more involved in quelling the protesters.

In other news, the Euro zone December manufacturing purchasing managers’ index (PMI) was reported at 46.3, which was better than market expectations and compares to the November reading of 46.9. A number below 50.0 suggests contraction in the sector.

A feature in the marketplace during the holiday season has been many currencies rallying significantly against the U.S. dollar. The U.S. dollar index did rebound overnight from a five-month low hit earlier this week. The other key “outside market” today sees Nymex crude oil prices near steady and trading around $61.00 a barrel.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the U.S. manufacturing PMI, and the global manufacturing PMI.

–Jim

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A feature in a generally quiet, holiday marketplace the past few days has been many currencies rallying significantly against the U.S. dollar, including the Swiss franc, Euro currency, Japanese yen, Canadian dollar and Australian dollar. The U.S. dollar index hit a five-month low overnight and is poised to close at a technically bearish monthly low close today, which would suggest more downside price pressure for the greenback in early January, or longer. This is a bullish development for the raw commodity sector, as most raw commodities are priced in U.S. dollars on the world market.

Tuesday, December 31–Jim Wyckoff’s Morning Markets Report

Asian stock indexes were mostly firmer overnight, while European stock indexes mixed to lower in quieter trading. The U.S. stock indexes are also pointed toward slightly higher openings when the New York day session begins, on this last trading day of 2019. Many U.S. markets close early today for the New Year’s holiday on Wednesday, when most global markets are closed.

Trader and investor attitudes remain upbeat going into 2020, due in large part to the world’s two largest economies, the U.S. and China, seeing a thaw in the more-than-two-year-old trade war that has slowed global economic growth. Most believe a partial trade deal will be signed in January.

A feature in a generally quiet, holiday marketplace the past few days has been many currencies rallying significantly against the U.S. dollar, including the Swiss franc, Euro currency, Japanese yen, Canadian dollar and Australian dollar. The U.S. dollar index hit a five-month low overnight and is poised to close at a technically bearish monthly low close today, which would suggest more downside price pressure for the greenback in early January, or longer. This is a bullish development for the raw commodity sector, as most raw commodities are priced in U.S. dollars on the world market.

The other key “outside market” today sees Nymex crude oil prices modestly up and trading close to a multi-month high at around $61.80 a barrel.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales reports, the U.S. house price index, the Case-Shiller home index, and the consumer confidence index.

–Jim

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Monday, December 30–Jim Wyckoff’s Morning Markets Report

Asian and European stock indexes were narrowly mixed in quieter overnight trading. The U.S. stock indexes are also pointed toward mixed openings when the New York day session begins on this last full trading day of 2019.

The markets are showing little reaction to the weekend U.S. air strikes against terrorist positions located in Iraq and Syria.

Trader and investor attitudes remain upbeat, due in large part to the world’s two largest economies, the U.S. and China, seeing a thaw in the more-than-two-year-old trade war. Most believe a partial trade deal will be signed in January.

A feature in the marketplace recently has been a rally in gold prices to a three-month high. Gold is on track to post its best annual price performance since 2010, with a gain of around 18% for the year.

The key “outside markets” today see the U.S. dollar index slightly lower. The greenback bulls have faded to end the year. Meantime, Nymex crude oil prices are slightly up and trading close to a multi-month high at around $62.00 a barrel.

U.S. economic data due for release Monday includes advance economic indicators, the ISM Chicago business survey, pending home sales and the Texas manufacturing outlook survey.

–Jim

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The U.S. stock indexes continue their trek north, setting record highs on a weekly and even daily basis recently. The steady, low-volatility climb is bullish and suggests more of the same. There are no early technical clues that the indexes are close to topping out. One solid technical signal that the U.S. stock indexes are peaking out would be a significant increase in daily price volatility at higher levels. When you see that start to happen (bigger daily price moves) then the end will be near. Stay tuned!–Jim