Opening Bell: Stocks, U.S. Futures Bounce On New Trade Deal Hopes; Oil Jumps

• European stocks reach new 5-year high, just 2% below all-time high
• U.S. stocks proved resilient yesterday, despite trade jitters
• Crude rebounds after inventory-fueled selloff

Key Events

After this morning's announcement that, working in phases, the U.S. and China have agreed to gradually cancel current tariffs, U.S. futures and European stocks vaulted past their the highest levels in four years, extending a rally to its fifth straight day.

Contracts on the S&P 500, Dow Jones Industrials and NASDAQ all jumped. As well, futures for the S&P 500 and Dow suggest new records could be hit today for the underlying indices, while the NASDAQ is likely to open right below its highest close on record.

Global Financial Affairs

Stoxx 600 Weekly

Europe's STOXX 600 Index advanced 0.4%, a move higher for a fifth consecutive session to a total rally of 2.5% overall. It's now just 2.05% from its all-time high, posted April 2015.

The mega cap German DAX, whose companies rely heavily on export activity, outperformed, +0.7%. Siemens AG Class N (DE:SIEGn) climbed 3.4%, providing the biggest boost to the STOXX 600, after the German industrial company’s fourth-quarter results beat expectations. Leading sectors were carmakers and miners; defensive stocks such as telecoms and utilities declined.

Earlier, in Asia, shares listed on Hong Kong’s Hang Seng rebounded, +0.57%, on the trade news, which turned a previously losing day into a gainer, while maintaining the rally. The index climbed for the fifth of six days. Australia’s ASX 200 outperformed, rising +1.00%. As China's biggest two-way trading partner, the land down under is heavily dependent upon the Asian country’s fortunes.

Most U.S. equities finished with near-record gains yesterday—or even edged higher—despite fears of another U.S.-China trade blowup after Beijing demanded Washington cancel previous tariffs. The NASDAQ, however, closed lower, though it finished well off the day's lows.

The resilience of U.S. equities to news that would normally send traders into a panicked selloff was a sign of strength, doubly so after recent record highs for the three main U.S equity benchmarks.

UST 10-Y Daily

Yields on the 10-year U.S. Treasury note resumed their advance after yesterday’s decline. The price pressed against the technical pressure point where the top of a symmetrical triangle meets with the downtrend line since November 2018.

Dollar Daily

The dollar fell from the 98.00 levels, the previous high, posted Oct. 30. The USD has been trending upwards within a rising channel since September 2018.

WTI Daily

West Texas crude narrowed much of yesterday’s drop after the EIA reported a big build in inventories. Technically, the commodity has been climbing since the Oct. 3 bottom, within a rising channel. Today’s rebound may be part of retesting the preceding Bearish Engulfing pattern, which would send it back within a correction, toward the bottom of the channel to $55.00.

Up Ahead

• Disney (NYSE:DIS) is scheduled to release Q4 2019 results today after the close. The expectation is for an EPS of $0.95 on $19.29B in revenue, compared to the corresponding quarter last year of $$1.48 EPS and $14.31B revenue, both of which beat forecasts. Last quarter, however, the company missed on both metrics.
• A monetary decision from the Bank of England is due Thursday.
• The USDA World Agricultural Supply and Demand Estimates Report for November comes out Friday.

Market Moves

Stocks

• Futures on the S&P 500 Index advanced 0.4%.
• The Stoxx Europe 600 Index gained 0.23%.
• The Shanghai Composite was little changed; it closed +0.02%.
• The MSCI Emerging Markets Index increased 0.1%.

Currencies

• The Dollar Index fell 0.1%.
• The euro gained 0.19% to $1.1086.
• The British pound advanced 0.1% to $1.2864.
• The yuan fell 0.34% to 6.9732 per dollar.
• The Japanese yen was up +0.16% to 109.12 per dollar.

Bonds

• The yield on 10-year Treasuries advanced two basis points to 1.84%.
• The yield on 2-year Treasuries jumped two basis points to 1.63%.
• Germany’s 10-year yield climbed one basis point to -0.32%.
• Britain’s 10-year yield gained two basis points to 0.731%.
• Japan’s 10-year yield increased two basis points to -0.064%.

Commodities

• West Texas Intermediate crude gained 0.8% to $57.17 a barrel.
• Iron ore declined 0.7% to $80.47 per metric ton.
• Gold fell 0.6% to $1,483.95 an ounce.