Opening Bell: Global Stocks Still Hostage To Trade Uncertainty; Gold Gains

Key Events

Futures on the S&P 500, Dow and NASDAQ 100 pared some of the steep losses that sent U.S. stocks to the worst selloff since the Christmas-eve rout on Tuesday—suggesting the global equity market may be starting to stabilize, though lingering in red territory and giving up some of those early gains in the late European morning.

On the other side of the Atlantic, Europe's STOXX 600 opened lower, somewhat extending yesterday’s fall, after it closed below the 50 DMA. Gains in Technology offset a drop in insurance companies. Meanwhile, positive German factory data pulled the euro higher.

In the earlier Asian session, Japan’s Nikkei (-1.46%) suffered the second day of deep losses, paying the the price for a ten-day holiday. Hong Kong’s Hang Seng (-1.23%) also took a beating and China’s Shanghai Composite gave up 1.12% amid renewed concerns of worsening trade relationships with the U.S..

Global Financial Affairs

Yields on 10-year Treasurys found support by a potential neckline for a H&S top, as investors rotated out of stocks and into bonds on risk off.

The yen continued to strengthen, presumably on its safe-haven status, though there are conflicting forces at play.

Gold extended a short-term climb since the beginning of the month, but it isn’t clear the yellow metal was helped by investors seeking shelter or the weakening dollar. Technically, the price is struggling against the resistance of the neckline of a H&S top—making it an ideal shorting position from a risk-reward ratio.

The renewed trade risk has injected a large dose of caution into a market we have repeatedly criticized for being too optimistic, pushing it way back from record high levels. Meanwhile, as if to add insult to injury to Chinese officials after Trump’s most recent backlash, exports in the Asian country unexpectedly fell in April, and imports rose. How might this economic development affect negotiations?

WTI rebounded back above the $60 levels, toward $62, but later resumed to edge lower. Technically, the price is struggling against the neckline of a H&S top, after the price slipped below the uptrend line since the beginning of the year. Meanwhile, the price found support by the 200 DMA after the 50 DMA crossed above it for a golden cross. From a fundamentals perspective, U.S. sanctions on Iran and Venezuela are yielding some unexpected outcomes that may further move oil prices.

Up Ahead

• Walt Disney (NYSE:DIS) releases earnings results after market close on Wednesday, with forecasts of $1.57 EPS and £14.48bn revenue. Analysts expect the entertainment giant to continue benefit from its business' strengths, as well as from its plans to take on rivals in the video-streaming market.
• Chinese Vice Premier Liu He is scheduled to return to Washington for trade talks on Wednesday.
• China reports on inflation on Thursday.
• U.S. trade figures come out on Thursday.
• The U.S. releases April CPI data on Friday.

Market Moves

• The U.K.’s FTSE 100 fell 0.1% to the lowest in almost six weeks.
• The MSCI Asia Pacific Index gave up 1% to the lowest in almost six weeks.
• The MSCI Emerging Market Index slipped 0.5% to the lowest in almost six weeks.

Currencies

• The Dollar Index slid less than 0.1%.
• The euro gained 0.1% to $1.1205, the strongest in more than a week.
• The British pound dropped 0.2% to $1.3052.
• The Japanese yen rose 0.1% to 110.11 per dollar, the strongest in more than six weeks.

Bonds

• The yield on 10-year Treasurys climbed less than one basis point to 2.46%.
• Germany’s 10-year yield gained less than one basis point to -0.04%.
• Britain’s 10-year yield fell one basis point to 1.147%, the lowest in more than a week.

Commodities

• Gold climbed 0.3% to $1,287.95 an ounce, the highest in almost four weeks.
• West Texas Intermediate crude rose 1% to $62.03 a barrel, the biggest advance in more than two weeks.