Daily Morning Report

Thursday, October 3–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were near steady to weaker overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. China markets are closed this week for a holiday.

There are still global economic growth and trade worries hanging over the world marketplace after some dour manufacturing data coming out of the U.S. and European Union earlier this week. There will be a batch of manufacturing reports coming out of the U.S. Thursday that will be very closely scrutinized as U.S. economic recession worries have resurfaced.

A World Trade Organization trade-dispute decision in favor of the U.S. over the European Union on aircraft has rattled European markets, as the U.S. then announced late Wednesday it will levy new import tariffs on EU products coming into the U.S.

In another sign of very low and even worrisomely low inflation in most of the world’s major economies, the Euro zone today reported its August producer price index down 0.5% from July and down 0.8%, year-on-year.

Traders are also awaiting Friday’s morning’s employment situation report for September from the U.S. Labor Department. Friday’s key non-farm payrolls number is forecast to be up 145,000 in September.

The U.S. dollar index is higher in early U.S. trading. The USDX hit a contract and two-year high earlier this week. Look for the greenback to continue to appreciate for at least the near term. Meantime, Nymex crude oil prices are slightly lower and trading around $52.50 a barrel. Oil prices are in a steep slide from the spike high scored in September.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the U.S. services PMI, the global services PMI, manufacturers’ shipments and inventories, and the non-ISM manufacturing report on business.

–Jim

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Wednesday, October 2–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were mostly lower overnight. U.S. stock indexes are pointed toward lower openings when the New York day session begins. China markets are closed this week for a holiday.

Risk aversion is back in the world marketplace at mid-week, as dour manufacturing reports from the U.S. and Europe on Tuesday have spooked traders and investors. Manufacturing activity in the U.S. slowed to a 10-year low in September, according to the Institute of Supply Management.

The U.S.-China trade war is mostly to blame for the slowdown in global economic and trade growth, many agree. The rhetoric between both sides has been and continues to be upbeat one day and downbeat the next—leaving traders and investors perplexed.

Violence in Hong Kong has escalated this week, with the national holiday in China. A protester was shot by police and is in critical condition, reports said. This is also adding some anxiety to the marketplace.

Traders are still monitoring world government bond markets following a surprisingly very poor pubic acceptance of the latest bond offering from the Japanese government. However, at mid-week U.S. Treasury bonds have recovered amid ideas of an easier monetary policy coming from the Federal Reserve, following the weak manufacturing data reported on Tuesday.

On tap today in the U.S. today is the ADP national employment report, which is a precursor to Friday’s more important employment situation report for September from the U.S. Labor Department. Today’s ADP jobs growth number is expected up 125,000. Friday’s key non-farm payrolls number is forecast to be up 145,000 in September.

The U.S. dollar index is higher in early U.S. trading. The USDX hit a contract and two-year high on Tuesday. Look for the greenback to continue to appreciate for at least the near term. Meantime, Nymex crude oil prices are slightly higher and trading around $53.80 a barrel.

Other U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the ISM New York report on business, and the weekly DOE liquid energy stocks report. Federal Reserve officials are also slated to give speeches today.

–Jim

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The Nymex crude oil futures market has backed way down from the spike high seen in September, including negating an uptrend line. The oil market bulls have quickly faded, suggested the spike high in September was a near-term market top. Look for sideways-at-best trading in crude oil futures in the near term–barring a major flare-up in geopolitics in the Middle East, which cannot be ruled out. Stay tuned!–Jim

Tuesday, October 1–Jim Wyckoff’s Morning Markets Report

Asian and European stocks were mixed to mostly weaker overnight. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins. A Jewish holiday and China markets closed for a holiday today are making for a bit more subdued trading conditions.

Violence in Hong Kong has escalated on Tuesday, a national holiday in China. Reports said a protester was shot with a live round of ammunition amid the escalating civil unrest. This news has not had a major impact on world markets—at least not yet.

In other overnight news, the Euro zone manufacturing purchasing managers index (PMI) fell to its lowest level in seven years, at 45.6 in September from 47.0 in August. The German manufacturing PMI was even worse in September, at 41.7. A reading below 50.0 suggests contraction in the sector. The Euro currency continues to slump against the U.S. dollar.

Australia’s central bank on Tuesday cut its interest rate by 0.25%, to 0.75%.

The World Trade Organization said Tuesday global economies are set for their weakest trade growth rate in 2019 since the major financial crisis over ten years ago. The WTO said global trade will slow to 1.2% this year from a 3% growth rate in 2018. The WTO blamed the trade war between the U.S. and China for the slowdown in trade.

The U.S. dollar index is firmer and hit another contract high overnight. Look for the greenback to continue to appreciate for at least the near term. Meantime, Nymex crude oil prices are higher and trading around $54.50 a barrel.

U.S. economic data due for release Tuesday includes the weekly Goldman Sachs and Johnson Redbook retail sales report, the U.S. manufacturing purchasing managers index (PMI), the ISM manufacturing report on business, construction spending, the global manufacturing PMI, and domestic auto industry sales.

–Jim

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

Asian stocks were mixed to mostly weaker, while European stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins.

Today is the last trading day of the month and of the quarter, which makes it an extra important day from a technical perspective.

There is a bit less risk aversion in the marketplace Monday, following markets being roiled last Friday by reports the U.S. was considering limiting U.S. investors’ investment in China, including the U.S. stock exchanges de-listing Chinese companies. Weekend reports then said the Trump administration is not considering such moves.

Asian stock markets saw some selling pressure after the 17th weekend in a row of demonstrations in Hong Kong. This past weekend is being called the worst, with many arrests after protestors bombarded police with everything from bricks to firebombs.

China’s economy got some slightly upbeat news Monday, as the official manufacturing purchasing managers index rose to 49.8 in September from 49.5 in August. It was the fifth month in a row with a reading below 50.0, which suggests contraction in the sector. The September PMI report did come in slightly above market expectations.

In other overnight news, the Euro zone jobless rate in August was reported at 7.4% versus 7.5% in July. The August rate was the lowest in 11 years.

Nymex crude oil prices are lower and trading around $55.25 a barrel. Meantime, the U.S. dollar index is higher early today.

U.S. economic data due for release Monday includes the international investment position, the ISM Chicago business survey, and the Texas manufacturing survey.

–Jim

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The December e-mini stock index futures have backed down a bit after challenging the summertime contract high earlier in September. The fact that prices have backed down in late September now makes those recent highs even stronger overhead technical resistance for the bulls to overcome. More selling pressure in the near term would begin to suggest the stock indexes have put in at least near-term market tops. Stay tuned!–Jim