Key Events
After a listless Asian session this morning, U.S. futures contracts, including for the Dow, NASDAQ and S&P, are seeing minor gains on thin trading as Europe remains on holiday. The same themes that drove markets to new highs ahead of the Christmas break—central bank accommodation and an apparent road to a trade deal between the world’s two largest economies, the U.S and China—are now propelling expectations of a bottom to the global economic slowdown and renewed growth in 2020.
Gold and crude oil climbed higher.
It's equities, however that could just be the story of 2019. The rising money supply, according to the Fed’s expanding balance sheet, may be turning financial institutions into greedy investors, as each must compete with the others to attract an increasingly spoiled clientele, who, with every piece of accommodative candy, want yet more. The expected economic rebound after what looks like a definite tariff reversal, has provoked demand for risk assets, which investors now seem to find irresistible.
Global Financial Affairs
S&P 500 futures edge up for a second day.
Every little bit counts as gains increase, helping 2019 shape up to become the strongest year for stocks in a decade.
Shares ticked higher today on Japan’s Nikkei 225 (+0.60%), China’s Shanghai Composite (+0.85%) and South Korea’s KOSPI (+0.36%), even without a cue from Wall Street overnight which was closed for the Christmas holiday. Hong Kong and Sydney remain shut for Boxing Day.
U.S. Treasury yields, including for the 10-year note, flopped on an attempted climb, ending flat.
Rates have been stuck for the past seven sessions after closing above the 200 DMA on Dec. 18, for the first time since Dec. 2, 2018. The current market dynamic has left yields in search of direction, moving between the long-term downtrend line since November 2018 and the short-term rising channel since the September bottom.
Market exuberance, coupled with renewed risk-on sentiment weakened the yen.
The traditional safe haven currency is trading at its lowest point since Nov. 27, within spitting distance of the May lows.
Crude oil climbed further, moving above $61 a barrel in New York. However, it shied away from an early attempt to take on yesterday’s intraday highs, at a resistance line since the September highs.
Irrespective of risk sentiment, gold advanced back above $1,500 an ounce, extending an upside breakout to a falling trendline since the Sept. 4 peak and the 100 DMA. However, that can be attributed to the weakness since September, from the 99.50 peak.
Up Ahead
- U.S. jobless claims will be released on Thursday.
- Japan's retail sales and industrial production data are scheduled for Friday.
- Because of the holiday, EIA crude oil inventories will be announced on Friday as well.
Market Moves
Stocks
- Futures on the S&P 500 Index were up 0.1%.
- Japan’s TOPIX Index closed up 0.6% in Tokyo.
- South Korea’s KOSPI Index rose 0.4%.
- The Shanghai Composite rose 0.9%.
- The MSCI Asia Pacific Index ticked up 0.2%; it's up almost 16% for the year.
Currencies
Bonds
- Yields on U.S. 10-year Treasuries were at 1.90%.
- Japan’s 10-year yields were around 0%.