- U.S. futures, European shares drift as market's fatigue offsets U.S.-China renewed trade deal commitment
- Alibaba's Hong Kong debut seals 6.59% surge but political risk weighs on the city's index
- NASDAQ Composite and S&P 500 hit new all-time high but bonds climb too
Key Events
Global stocks and futures on the S&P 500, Dow and NASDAQ 100 wavered this morning, giving up a clearer climb spurred by a U.S.-China agreement to continue talks on the first phase of a trade deal.
China’s top trade negotiator, Vice President Lie He, U.S. Trade Representative Robert Lightizer and Treasury Secretary Steven Mnuchin were reported to have reached “a common understanding on resolving relevant problems,” with a view to tackling both "core issues of concerns" and remaining items.
While investors have recently tended to respond favorably to any news that isn’t negative, pricing up stocks and futures, they showed signs of fatigue today, sending the market to its original level very quickly.
Optimism surrounding progress on a U.S. China trade deal has sustained global stocks for going on three months now: if negotiations turn out to be a flop, investors will have bought stocks at the priciest levels in history and may be forced to sell at a loss.
It’s to be noted, though, that both sides of the negotiation table currently have more incentives to seal a successful deal. U.S. President Donald Trump is preparing his reelection bid amid Democratic efforts to impeach him, while China’s economy has showed worsening conditions.
SPX futures in particular wiped out almost all of their gains, leaving a scorched shooting star in their wake.
Europe’s STOXX 600 edged lower, as declining travel firms' shares eclipsed gains in personal goods stocks.
In the earlier Asian session, regional equities ended mixed. Japan’s Nikkei 225 (+0.35%) outperformed, while China’s Shanghai Composite (+0.03%) closed flat.
Alibaba (HK:9988) jumped as much as 6.59% in its Hong Kong debut, though stocks listed on the city’s Hang Seng (-0.29%) sagged after the Chief Executive Carrie Lam fell short of putting forward any alternative proposal in the wake of Sunday’s local elections, which saw a landslide victory for the pro-democracy party.
Global Financial Affairs
U.S. stocks enjoyed a strong rally on Monday, also thanks to China's new commitment to stricter intellectual property regulations—a move that boosted the odds of a successful trade deal between the world’s two largest economies.
However, we warned yesterday that the Chinese government is preparing to sell a record amount of dollar-denominated bonds, and we wouldn't be surprised if after the bond sale the country's intellectual property policy reverts to its previous stance.
The S&P 500 (+0.75%), the NASDAQ Composite (+1.32%) and the Dow Jones Industrial Average (+ 0.68%) all reached fresh records, closing at the top of their sessions—with the former two also hitting new all-time highs.
The Russell 2000 closed at the highest price since early October, completing a bullish flag.
Yields on 10-year Treasurys fell for the second day this morning, as they struggle with the long-term downtrend line since the November 2018 top, while still within a short-term rising channel since the Sept. 3 bottom.
The dollar remained flat, 0.05% below its highest price since Oct. 14.
Bitcoin rebounded for a second day on the Bifinex exchange, finding resistance by the late-October lows, as we forecast yesterday.
Up Ahead
Market Moves
Stocks
Currencies
Bonds
Commodities