Many years ago I used to work on the trading floor of the Chicago Board of Trade, and the veteran grain traders would tell me to keep a close eye on soybean meal futures, as it many times will lead soybeans in trending price moves, including trend reversals. The price action on the daily chart for May soybean meal futures the past couple days shows a potential selling “exhaustion tail,” whereby the bears just run out of gas and the downtrend stops. However, a downtrend line is still in place on the daily chart for May meal. This week’s price action in soybean meal futures will be extra important for soybean futures. If meal can close out the week in strong fashion, including negating the downtrend line on the chart, then such would be a solid technical clue that the soybean meal and soybean markets have put in bottoms and can at least trend sideways, if not sideways to higher, in the coming weeks and few months. Stay tuned!
Daily Morning Report
World Stock Markets Pause Tuesday, After Recent Gains
Tuesday, March 5–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were mixed overnight. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. U.S. stock indexes are at multi-month highs and enjoying price uptrends on the daily bar charts.
In overnight news, the unofficial China purchasing managers’ index (PMI) for February came in at its lowest level since October. China also on Tuesday lowered its projected gross domestic product growth for the year. The National People’s Congress lowered its 2019 GDP growth estimate to a rate of 6.0% to 6.5%, from 6.5%. Chinese economic officials also pledged to continue to support the manufacturing sector and emerging businesses, including new deficit spending and tax cuts. The trade war with the U.S. the past year has dented the Chinese economy, which in turn has likely made Chinese leadership keen to end its trade war with the U.S. China is holding its National People’s Congress annual conference this week.
Attention of the marketplace later this week will be on the European Central Bank’s regular monetary policy meeting on Thursday. The ECB is expected to loosen its purse strings and provide more low-interest financing to Euro zone banks in order to stimulate an anemic Euro zone economy.
The U.S. March jobs report from the Labor Department is due out Friday morning. That’s arguably the most important U.S. economic data point of the month. The key non-farm payrolls number is forecast to come in at up 180,000.
The key outside markets today see the U.S. dollar index slightly firmer. The greenback bulls have regained some technical strength recently. Nymex crude oil prices are slightly down and trading around $56.50 a barrel.
U.S. economic reports due for release Tuesday include the weekly Goldmand Sachs and Johnson Redbook retail sales reports, new residential sales, the U.S. services purchasing managers’ index (PMI), the global PMI, the IDB/TIPP economic optimism index, the ISM non-manufacturing survey, and the monthly Treasury budget statement.
–Jim
Likely U.S. China Trade Deal This Month Boosts World Stock Markets
Monday, March 4–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were mostly higher overnight, with the stock market in China hitting a nine-month high. U.S. stock indexes are also pointed toward firmer openings and at multi-month highs when the New York day session begins.
Traders and investors worldwide continue to exhibit risk-on attitudes early this week. The Wall Street Journal reported Sunday the U.S. and China are close to finalizing a trade agreement. The story said China would lower its tariffs on U.S. imported goods, with the U.S. doing the same on most or all of the trade sanctions it levied against China last year. The report said U.S. President Trump and Chinese President Xi Jinping will meet in Florida later this month. A trade deal would end months of trader and investor uncertainty regarding the world’s two largest economies penalizing each other.
Attention of the marketplace later this week will be on the European Central Bank’s regular monetary policy meeting on Thursday. The ECB is expected to loosen its purse strings on money in order to stimulate an anemic Euro zone economy.
The U.S. jobs report from the Labor Department is due out Friday morning. That’s arguably the most important U.S. economic data point of the month.
In overnight news, the Euro zone January producer price index was released and it came in up 0.4% from December and up 3.0%, year-on-year. Those numbers were in line with market expectations.
The key outside markets today see the U.S. dollar index slightly firmer. Nymex crude oil prices are up and trading just above $56.00 a barrel.
U.S. economic reports due for release Monday includes the ISM New York report on business, and construction spending.
–Jim
U.S. Stock Index Bulls Continue to Show Power
The U.S. stock indexes are in solid near-term price uptrends and this week hit three-month highs. See on the daily bar chart for the June S&P e-mini futures that prices are now challenging some technical resistance, which if cleared on the upside would then allow bulls to challenge the record high scored last fall. It’s still my bias that last autumn’s record highs will be a tough nut to crack for the U.S. stock index bulls. Stay tuned!
Traders/Investors Cast Aside Geopolitics to Rally Stock Markets Friday
Friday, March 1–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Asian and European stock markets were mostly up overnight. U.S. stock indexes are also pointed toward firmer openings when the New York day session begins. Despite some geopolitical speed bumps this week—U.S. President Trump walking out of the U.S.-North Korea nuclear talks and the India-Pakistan military strikes—traders and investors are mostly upbeat and in the mood to buy equities over hard assets. The keener risk appetite in the market place is partly due to notions the U.S. and China—the world’s two largest economies—are close to a deal that would end their trade war.
Adding to the positive tone in the world markets Friday is positive economic news coming out of the European Union. The Euro zone jobless number fell by 23,000 in January, with the overall unemployment rate unchanged from December, at 7.8%. Meantime, inflation rose slightly in the Euro zone in February, to 1.5% from 1.4% in January, year-on-year. The European Central Bank would like to see a Euro zone inflation rate of around 2.0%. However, the Euro zone manufacturing purchasing managers’ index fell slightly in February, it was reported today.
Fed Chairman Jerome Powell gave a speech in New York Thursday night, in which he reiterated the Fed’s monetary policy will remain on hold due to the modest increase in risks to continued U.S. economic expansion. Markets did not react significantly to Powell’s remarks, as he just concluded two days of testimony on economic policy to Congress.
The key outside markets today see the U.S. dollar index firmer. However, overall the greenback bulls have faded this week. Nymex crude oil prices are slightly up and trading around $57.50 a barrel.
U.S. economic reports due for release Friday include personal income and outlays, the U.S. manufacturing PMI, the global manufacturing PMI, the University of Michigan consumer sentiment survey, the ISM manufacturing report on business, and domestic auto industry sales.
–Jim
Risk Aversion in Marketplace Upticks Late This Week as U.S.-North Korea Talks Abruptly End
Thursday, February 28–Jim Wyckoff’s Morning Markets Report
OVERNIGHT DEVELOPMENTS
Risk aversion is back in the marketplace Thursday, as
Asian and European stock markets were lower overnight. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins. Gold prices are moderately higher.
The U.S.-North Korea nuclear summit in Vietnam has ended abruptly with no agreement after North Korea’s leader Kim Jong Un demanded an end to sanctions on his country and would not agree to U.S. President Trump’s demands to de-nuclearize.
There is another geopolitical development that has the attention of the world marketplace late this week. India and Pakistan this week exchanged military strikes on each other. India bombed what it said was a terrorist camp in Pakistan, with Pakistan retaliating by shooting down two Indian aircraft. This news has Asian stock and financial markets jittery. Any escalation of this situation will prompt more safe-haven demand for gold and silver.
There was weak manufacturing data coming out of China today, as its official purchasing managers’ index fell to 49.2 in February, down from 49.5 in January. A reading below 50.0 shows contraction in the sector. U.S. trade sanctions on China have hurt its economy.
On an upbeat note, U.S. Trade Representative Lighthizer told a congressional committee on Wednesday that the U.S. and China are moving closer to a trade deal and that any new U.S. tariffs on China would be delayed from the March 1 original implementation.
The key outside markets today see the U.S. dollar index lower. The greenback bulls are fading a bit this week. Nymex crude oil prices are weaker and trading around $56.50 a barrel.
U.S. economic reports due for release Thursday include the weekly jobless claims report, fourth-quarter gross domestic product, the ISM Chicago business survey, and the Kansas City Fed manufacturing survey.
–Jim