Daily Morning Report

Wednesday, October 24–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mixed to firmer overnight, rebounding from solid losses Tuesday, as risk aversion is a bit less today than it was on Tuesday. U.S. stock indexes are pointed toward lower openings when the New York day session begins.

The S&P 500 stock index on Tuesday dropped below what was strong chart support at its October low. Such suggests a new leg down in prices is coming for the U.S. stock market. That’s bullish for hard assets such as gold and silver.

There are still geopolitical issues looming over the world marketplace, including the U.S.-China trade war, U.S.-Saudi Arabia tensions over the murdered Saudi journalist, and Italy’s recalcitrance over forming its budget to meet European Union constricts. The EU Wednesday rejected the latest Italian draft budget.

All of the above have pushed world stock markets and crude oil prices sharply lower, as well as rallied safe-haven assets like gold, U.S. Treasuries and the U.S. dollar.

In overnight news, the Euro zone got some dour economic data when the composite Markit purchasing managers index (PMI) fell to 52.7 in October from 54.1 in September. The October number was lower than expected and the lowest level in two years.

Traders and investors in Europe are awaiting Thursday’s European Central Bank regular monetary policy meeting. No change in EU monetary policy is expected, but ECB chief Mario Draghi’s press conference could provide clues on future moves by the central bank. Also, Draghi could comment on the rift between Italy’s new government and the EU.

The U.S. economic highlight this week will be the first estimate of third-quarter GDP due out Friday morning. GDP is seen up 3.4% in the third quarter, on an annual basis.

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The U.S. stock indexes are under strong selling pressure again early this week. If the December e-mini stock index futures drop below strong chart support at the October low (which was very close to occurring as of this writing) then more chart damage would be inflicted to suggest a fresh leg down in prices. The bulls need to make a stand right now, and if they fail then sideways-to-lower price action is likely to continue in the coming weeks. Stay tuned!

Tuesday, October 23–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mostly lower overnight as risk aversion has returned to the marketplace amid geopolitical tensions. China’s stock indexes were sharply down after good gains posted Monday. South Korea’s and Japan’s stock markets were also sharply lower. U.S. stock indexes are pointed toward lower openings when the New York day session begins. The U.S. indexes are back near their October lows.

Gold prices are sporting good gains today on safe-haven demand.

The Turkish president went on television overnight to explain that the Saudi journalist that was killed in a Saudi consulate in Istanbul was brutally slain in a planned attack. The Saudi kingdom denies involvement in the murder. The U.S. and other Western nations are trying to get to the bottom of the matter, but President Trump has been cautious about the situation, what with the strong U.S. business ties to Saudi Arabia.

The China-U.S. trade showdown is negatively impacting China’s economy and weighing on Asia’s stock markets. Two U.S. warships are presently traveling near China and through the Taiwan Strait, to amplify tensions.

Thursday’s European Central Bank regular monetary policy meeting will be closely watched by the marketplace. No change in EU monetary policy is expected, but ECB chief Mario Draghi’s press conference could provide clues on future moves by the central bank. Also, Draghi could comment on the rift between Italy’s new government and the EU. European stock markets are wobbly this week as the Italian government is scoffing at EU budget rules.

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Monday, October 22–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mostly firmer overnight. Asian shares gained overnight, led by China’s stock market rallying more than 4% as Chinese economic officials said they are prepared to stimulate the economy, including cutting personal taxes. European stock markets were also up, but worries remain regarding Italy’s budget problems with the European Union, and with Brexit concerns. U.S. stock indexes are pointed toward firmer openings when the New York day session begins.

The U.S.-China trade war remains in focus after Trump administration economic advisor Larry Kudlow said China is doing “nothing” to mitigate the matter. Reports last week said President Trump and Chinese leader Xi Jinping will meet at the G20 conference in Argentina in late November.

Thursday’s European Central Bank regular monetary policy meeting will be closely watched by the marketplace. No change in EU monetary policy is expected, but ECB chief Mario Draghi’s press conference could provide clues on future moves by the central bank. Also, Draghi could comment on the rift between Italy’s new government and the EU.

The U.S. economic highlight this week will be the first estimate of third-quarter GDP due out Friday morning. GDP is seen up 3.4% in the third quarter, on an annual basis.

The key outside markets today find the U.S. dollar index slightly higher. Meantime, November Nymex crude oil prices are near steady and just above $69.00 a barrel.

U.S. economic data due for release Monday is light and includes the Chicago Fed national activity index.

–Jim

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The U.S. dollar index is a basket of six major world currencies weighted against the greenback. See on the daily bar chart that the dollar bulls had a good week amid several geopolitical matters on the front burner of the marketplace that prompted safe-haven demand for the world’s strongest currency. And those geopolitical developments could see at least one of them escalate in the near term. Don’t be surprised to see the dollar index rally beyond chart resistance located at the summertime high in the coming weeks, or sooner. Stay tuned!

Friday, October 19–Jim Wyckoff’s Morning Markets Report

OVERNIGHT DEVELOPMENTS

Global stock markets were mostly firmer overnight. China’s stock market rallied after the Chinese government pledged to keep its economy on track and expressed confidence in future growth. This comes after the Chinese stock market dropped to a multi-year low Thursday and the Chinese yuan dropped to a 21-month low against the U.S. dollar. U.S. stock indexes are pointed toward firmer openings when the New York day session begins, on modest corrective bounces after solid losses suffered on Thursday.

In overnight news, China’s gross domestic product grew by 6.5% in the third quarter, year-on-year. That was down from the 6.7% growth rate in the second quarter. A rate of 6.6% was expected for the third quarter. The third-quarter figure was the slowest economic growth pace for China in several years.

The Euro currency has been rattled again this week by recurring trader concerns regarding Italy falling into line with European Union rules on country’s budgets.

And don’t be surprised if trader and investor anxiety upticks as the trading session progresses Friday, heading into a very uncertain weekend. This is mainly due to pending results of an investigation into the disappearance of a Saudi journalist that could be a murder and could involve the Saudi Arabian government. The markets were jolted on Thursday when U.S. Secretary Mnuchin backed out of a high-level business conference being held in Saudi Arabia.

The key outside markets today find the U.S. dollar index slightly higher. Meantime, November Nymex crude oil prices are modestly up and are trading below $69.00 a barrel. Still, oil prices hit a four-week low on Thursday amid concerns about worldwide economic growth that could crimp demand for crude.

U.S. economic data due for release Friday is light and includes existing home sales.

–Jim

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