Breaking News
0

Opening Bell: U.S. Futures, Europe Rally As Investors Switch To Bullish Mode

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewAug 21, 2019 07:38AM ET
www.investing.com/analysis/opening-bell-us-futures-europe-rally-as-investors-switch-to-bullish-mode-200457014
Opening Bell: U.S. Futures, Europe Rally As Investors Switch To Bullish Mode
By Investing.com (Pinchas Cohen/Investing.com)   |  Aug 21, 2019 07:38AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

  • U.S. futures rebound as traders shun trade, growth headwinds ahead of Fed minutes
  • Europe climbs on Fiat-Renault reports, German stimulus measure
  • Yields climb on technicals

Key Events

Futures on the S&P 500, Dow and NASDAQ 100 jumped with European stocks this morning as traders returned to risky assets, shrugging off mixed U.S.-China trade signals, renewed growth worries and political uncertainty in Italy.

Upbeat pre-market earnings results from consumer heavyweights Lowe’s (NYSE:LOW) and Target (NYSE:TGT) helped investors shift to a bullish mode and push U.S. contracts higher.

STOXX 600 Daily Chart
STOXX 600 Daily Chart

As for Europe's STOXX 600, it was automobile companies that mostly lead the gains, buoyed by reports of progress on merger talks between Fiat Chrysler (MI:FCHA) and Renault (PA:RENA).

Plans by Germany to ease a surcharge on income taxes also helped the pan-European index retest levels near two-week highs—which, if breached, would complete a small H&S bottom. Both the MACD and RSI support the case for a short-term reversal. Conversely, the volume play doesn’t follow the reversal structure.

EUR/USD Daily Chart
EUR/USD Daily Chart

The euro was little changed after posting a—seemingly—counterintuitive leap forward after Italy’s Prime Minister Giuseppe Conte resigned, formally starting a governmental crisis that will lead to either a new coalition government or new general elections. Technically, the price of the single currency found support at the month’s lows, after a five-day selloff that followed a test to the neckline of a H&S continuation pattern. However, similarly to what was observed in the equity benchmark, the volume did not fit a typical H&S pattern.

In the earlier Asian session, Australia’s S&P/ASX 200 (-0.94%) lagged after a two-day winning streak. Miners and retailers weighed on the average on renewed recession fears.

South Korea’s KOSPI (+0.22%) outperformed, followed by Hong Kong’s Hang Seng (+0.15%), despite news Chinese e-commerce giant Alibaba (NYSE:BABA) delayed its planned $15bn share listing in the city due to mounting political instability.

Global Financial Affairs

U.S. stocks slid lower on Tuesday, yielding to the contrasting pressures of potential fiscal and policy stimulus on one side and underlying recession risks on the other.

President Donald Trump fed recession fears by admitting the tariff dispute with China could halt growth. However, in a separate move that was most likely aimed at quelling the same growth concerns, he boosted stimulus hopes on the fiscal front, confirming he was considering "various tax reductions"—after he increased pressure on the Fed to implement a substantial interest rate cut.

On the trade front, U.S. Secretary of State Mike Pompeo said the trade war could end by next year, while Trump warned on Monday it would be hard to reach a deal if Hong Kong turns into “another Tiananmen Square.”

All these come ahead of the closely-watched publication of the minutes from the Fed's latest monetary policy meeting, with investors hoping that both the meeting accounts and the upcoming speech by Chairman Jerome Powell at the annual Jackson Hole summit will bolster the case for continued policy easing.

UST 10-Year Daily Chart
UST 10-Year Daily Chart

Meanwhile, the yield on 10-year Treasurys edged higher this morning after dropping yesterday, extending a consolidation pattern in the shape of a rising flag, bearish in the downtrend. The move comes after a completion of a small bearish flag earlier in the month. A downside breakout may put pressure on equities again. The back-to-back continuation patterns developed after a failed H&S bottom, whose failure backtracked market dynamics, catching investors on the wrong side of the market.

USD/JPY Daily Chart
USD/JPY Daily Chart

While the Dollar Index was little changed, the greenback still managed to climb against the yen, potentially forming a small H&S bottom, with volume action supporting such a scenario.

Oil gained ground, though prices remained squeezed between the support of the 200 DMA and the resistance of the falling channel top.

Up Ahead

    • Minutes of the Fed’s July meeting, due on Wednesday, will provide details on the discussions leading to the first interest-rate cut in a decade.

  • Germany will sell 30-year bonds at a 0% coupon for the first time on record on Wednesday, kicking off a flurry of debt sales scheduled for the next two weeks offering negative rates.
  • Kansas City Federal Reserve Bank hosts its annual central banking symposium in Jackson Hole, Wyoming, starting on Thursday. Fed chair Jerome Powell will give remarks on Friday.
  • Flash PMIs are out for the euro area on Thursday.
  • Also on Thursday, the Bank of Indonesia is scheduled to decide oninterest rates, followed by a press conference with Governor Perry Warjiyo.

Market Moves

Stocks

Bonds

  • The yield on 10-year Treasurys edged three basis points higher to 1.59%.
  • The yield on 2-year Treasurys gained two basis points to 1.53%.
  • Britain’s 10-year yield rose two basis points to 0.471%.
  • Germany’s 10-year yield climbed two basis points to -0.67%.

Currencies

    Commodities

  • The Dollar Index was flat.
  • The euro declined 0.1% to $1.1092.
  • The Japanese yen fell 0.3% to 106.55 per dollar.
  • West Texas Intermediate crude gained 0.3% to $56.31 a barrel.
    • Gold fell 0.5% to $1,499.48 an ounce.

Opening Bell: U.S. Futures, Europe Rally As Investors Switch To Bullish Mode
 
Opening Bell: U.S. Futures, Europe Rally As Investors Switch To Bullish Mode

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
Bob Blahblah
Bob Blahblah Aug 21, 2019 5:22PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
...as janet sits on the bid. there, fixed it for you comrade
icouldnotthink67 .
icouldnotthink67 . Aug 21, 2019 8:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
The title isn't misleading on here for once. I like it.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email