Daily Morning Report

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

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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!

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

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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

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The U.S. Treasury bond futures market has been trading in a sideways and choppy fashion for several weeks, but prices are not far below the contract high and the bulls are maintaining their firm overall near-term technical advantage. That suggests the next bigger price move will be up. Stay tuned!

Wednesday, February 27–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Asian and European stock markets were mostly lower overnight. U.S. stock indexes are also pointed toward weaker openings when the New York day session begins. There is some risk aversion in the marketplace today, especially in Asian markets.

There is a geopolitical hotspot that has the attention of the world marketplace at mid-week. India and Pakistan have exchanged military strikes on each other the past two days. 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 on edge.

Brexit concerns still have European traders just slightly worried, but it appears Prime Minister Theresa May and Parliament have agreed to extend the Brexit deadline past late-March if a deal on the U.K. exiting the European Union is not reached.

Traders, investors and markets did not show big reactions to Federal Reserve Chairman Jerome Powell’s testimony to the U.S. Senate on Tuesday. Powell sounded a more dovish tone on U.S. monetary policy, which is what most expected. Powell speaks to the House of Representatives today.

In another sign of the low inflation expectations in the world marketplace at present, the German government today auctioned its 10-year bonds (bunds) for an average yield of just 0.12%. That’s the lowest level in nearly 2.5 years.

The key outside markets today see the U.S. dollar index slightly lower. The greenback bulls are fading a bit this week. Nymex crude oil prices are higher and trading around $56.50 a barrel.

U.S. economic reports due for release Wednesday include the weekly MBA mortgage applications survey, the advance economic indicators report, pending home sales, manufacturers’ shipments and inventories, and the weekly DOE liquid energy stocks report.

–Jim

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