US-China trade talks seemed to have progressed well, and trade representatives are moving on for a third day of negotiation.
Agricultural and energydeals were probably at the centre of discussion, as US farmers were bearing the cost of this trade war since last year. Soybean future prices tumbled as much as 22% from May to July 2018 and have since bounced back, but still 12% below the previous high.
US has emerged to be a net exporter of crude oil and liquefied natural gas (LNG) since recent years, and US delegates will try to work out a plan to sell them to China and convince Chinese companies to invest billions of dollars in future US LNG export projects. Extended trade talks led investors to forget, at least temporarily, the complexity and divergence in the key disputed area – technology theft, intellectual property disputes, cyber securities etc., between the two countries.
US equities extended their four-day rally, with major indices rallying 1% last night. Sentiment is improving across the board, suggested by the retracement in safe-havens – gold, yen and treasuries. Technically, the S&P 500 index is poised to challenge its next resistance level at 2,590 area – the previous 100% Fibonacci Extension level. Breaking above this level will likely result in flipping of its SuperTrend (10,3), and signalling a trend-reversal.
Crude oil Brent climbed for six consecutive days to US$58.7 per barrel, as hopes were built on trade talks and China’s fiscal stimulus to lift energy demand. Oil traders are eyeing tonight’s US DoE Crude oil inventory data to paint a clearer picture of the supply-demand relationship. Market is expecting some 3.5 million barrels drop in oil stockpile. A bigger-than-expected drop will likely push price higher whereas an increase in stockpile will likely to reverse.
In Singapore, the Straits Times Index has broken out above 3,100 resistance and is attempting to reach higher highs. The next resistance level can be found at around 3,200 area. Stronger oil prices are lifting the sentiment, especially in offshore & marine and banking sector. Cyclical sectors such as technology, electronics, industrial and consumer are also having vivid rally these days, thanks to the trade talks.
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