The U.S. stock indexes this week scored 5.5-month highs and remain in solid price uptrends on the daily bar charts. The recent low volatilty amid the price uptrends suggests more of the same in the near term: sideways-to-higher trading action. There are no early, significant technical clues to suggest the stock indexes are close to topping out. Stay tuned!
Daily Morning Report
Global Equity Markets Pause Ahead of Trump’s Meeting With China Officials
Thursday, April 4–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock indexes were mixed to weaker overnight. U.S. stock indexes are pointed toward slightly lower openings when the New York day session begins. The stock markets are seeing corrective pullbacks from recent gains that pushed the U.S. stock indexes to 5.5-month highs this week.
Traders and investors worldwide are still generally upbeat, due in part to optimism the U.S. and China will soon reach a trade deal. Reports said President Trump will today meet with Chinese Vice Premier Liu He in Washington. He is part of the Chinese trade delegation in town. Reports say the U.S. and China are very close to a trade deal. The marketplace is wondering if Trump will today mention a summit meeting with Chinese President Xi Jinping to seal the trade deal.
In other overnight news, India’s central bank lowered its main interest rate for the second time this year, to 6.0% from 6.25%.
Germany’s manufacturing orders dropped sharply in February, at down 4.2% from January. Forecasts were calling for a 0.5% rise in the period.
A European report just out said Italian economic growth for 2019 has been reduced from 1.0% to 0.1%. This could impact the European markets more significantly, given Italy’s already fragile financial system.
Market watchers are looking ahead to the U.S. Labor Department’s employment report for March, which is due out Friday morning. It’s arguably the most important economic data point of the month. The key non-farm payrolls number in the report is forecast to be up 175,000 in March, with the unemployment rate expected to remain at 3.8%. Wednesday’s precursor report, the ADP national employment report for March, showed a gain of 129,000 jobs, which was a significant downside miss. The payrolls number was forecast to be up 173,000. This suggests Friday’s more important jobs report could also be a miss to the downside.
The key outside markets today see the U.S. dollar index slightly higher. Meantime, Nymex crude oil prices are near steady and trading around $62.50 a barrel.
U.S. economic reports due for release Thursday include the weekly jobless claims report and the Challenger job-cuts report. There are also several Federal Reserve officials scheduled to give speeches today.
–Jim
World Stock Markets Still in Rally Mode at Mid-Week; U.S. ADP Jobs Report on Deck
Wednesday, April 3–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock indexes were firmer overnight. U.S. stock indexes are pointed toward higher openings and at 5.5-month highs when the New York day session begins.
So far this week, traders and investors have elevated risk appetites to boost world stock markets, due in part to optimism the U.S. and China will soon reach a trade deal. Talks on the matter take place in Washington, D.C. beginning today.
The key U.S. data point of the day is the ADP national employment report for March. The payrolls number is forecast to be up 173,000. This number is a precursor to the more important jobs report from the Labor Department that is due out Friday morning. The non-farm payrolls number in that report is forecast to be up 175,000 in March, with the unemployment rate expected to remain at 3.8%.
In overnight news, the Euro zone’s Markit composite purchasing managers’ index (PMI) showed a reading of 51.6 in March from 51.9 in February.
On the Brexit front, U.K.’s Parliament and Prime Minister Theresa May cannot come to agreement on a “soft” exit, with May wanting to extend the deadline for a “hard” exit.
The key outside markets today see the U.S. dollar index lower on a corrective pullback from recent gains. Meantime, Nymex crude oil prices are slightly higher, hit another 4.5-month high and are trading around $62.50 a barrel.
U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the ADP national employment report, the U.S. services PMI, the ISM non-manufacturing report on business, the global services PMI, and the weekly DOE liquid energy stocks report.
–Jim
Grain Market Bulls Reeling, Need a Spark
The grain markets have been hammered in recent weeks, amid the U.S.-China trade war that has hurt U.S. ag exports, the bearish specter of very low worldwide inflation levels, a stronger U.S. dollar, and most recently the generally bearish USDA data released last Friday. Grain market bears are in firm technical command at present. To break the grain markets out of their bearish modes it’s very likely going to take a serious weather market scare during the U.S. planting and growing seasons for U.S. corn and soybeans. The potential good news for the beleaguered grain market bears is that more years than not during the spring and summer months, the grain markets to experience at least one weather-market scare that pushes prices higher, at least temporarily. Stay tuned!
Quieter Marketplace Tuesday as World Stock Markets Pause
Tuesday, April 2–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock indexes were mixed to slightly up in quieter trading overnight, following Monday’s good gains. U.S. stock indexes are pointed toward steady to mixed openings when the New York day session begins. The U.S. indexes are at or near their recent multi-month highs and are enjoying solid price uptrends on the charts.
In overnight news, Australia’s central bank, the Royal Bank of Australia, left its monetary policy unchanged at the bank’s regular meeting. The RBA did warn that the Aussie economy is not meeting its inflation target and doing so may take a while. This continues a theme of very low, and possibly even problematic, inflation in the major economies of the world. Low inflation is the enemy of raw commodity market bulls.
The World Trade Organization has cut its 2019 world trade growth forecast to 2.6% from 3.7%, mainly due to the U.S.-China trade war. The WTO also said trade growth in 2017 slowed to 3% from 4.6% in 2017.
The Euro zone February producer price index came in at up 0.1% from January and up 3.0%, year-on-year. Those figures were in line with market expectations.
Bitcoin prices made a sudden jump higher in overnight trading, but the reason is unclear.
The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are also higher, hit another 4.5-month high overnight and are trading just above $62.00 a barrel.
U.S. economic reports due for release Tuesday include the weekly Goldman Sachs and Johnson Redbook retail sales reports, durable goods orders, the ISM New York report on business, and domestic auto industry sales.
–Jim
Improved China Economic Data Lifts World Stock Markets Monday
Monday, April 1–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
On this first day of the second quarter, Asian and European stock indexes were mostly higher overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Risk appetite in the world marketplace remains elevated to start April.
In overnight news, China got some upbeat manufacturing data to boost Asian shares Monday. The Caixin-Markit China purchasing managers index (PMI) came in at 50.5 in March from 49.2 in February. A reading above 50.0 suggests growth in the sector.
In other overnight news, the Euro zone jobless rate was reported at 7.8% in February, which is unchanged from January and in line with market expectations. The Euro zone March consumer price index came in at up 1.4%, year-on-year, versus up 1.5% in February. The March CPI reading was just a bit below trade expectations, continuing a worldwide theme of very low inflation. Last autumn, notions among many economists and market watchers were growing that inflation was creeping back into the world marketplace, and possibly becoming problematic. Those ideas have all but disappeared now.
Minneapolis Federal Reserve Bank President Neel Kashkari said Monday now is not the time to lower U.S. interest rates. While he said risks to the U.S. economy have increased, Kashkari said the Fed needs more time to see if those risks pan out. He said he is worried about low inflation. Kashkari was interviewed by the Wall Street Journal and is one of the Fed’s more dovish members on U.S. monetary policy.
The key outside markets today see the U.S. dollar index weaker. Meantime, Nymex crude oil prices are higher, hit a 4.5-month high overnight and are trading around $60.50 a barrel.
It’s a busy day for U.S. economic reports Monday, including retail sales, the U.S. manufacturing purchasing managers index (PMI), manufacturing and trade inventories, construction spending, the ISM manufacturing report on business, and the global manufacturing PMI.
–Jim