European equity markets largely finished higher yesterday as the news that President Trump will defer imposing higher tariffs on Chinese imports lifted investor sentiment.
Last week, the US president said the March deadline for reaching a deal was not a ‘magical date’, so it wasn’t a major surprise when he pushed back the deadline. Progress is being made in relation to trade negotiations and it propelled stock markets higher.
US stocks markets also drover higher on the back of the trade news. Oddly, US stocks were probably the least impacted when trade tensions were high, and now the mood has been lifted. We are not out of the woods yet though, as Mr Trump said that China might get a trade deal soon, or perhaps not at all. President Trump doesn’t want to take the pressure off Beijing. Stocks in Asia were mixed last night as some of the euphoria surrounding the trade situation wore off, although the Shanghai market managed to headway.
The leaders of the US turned his attention to oil yesterday, and he called on OPEC not to drive up prices again, and claimed the global economy is too fragile to cope with higher energy prices. It has not been the first time the US president has criticised the organisation that represents oil producing nations. The oil market sold-off yesterday as dealers used Mr Trump’s comments as an excuse to exit the oil market, as it has enjoyed a rally since late December.
Prime Minister May claimed she if focused on leaving the EU on 29 March, but she believes more work needs to be done on the deal before parliament vote on the withdrawal agreement. Mark Rutte the Dutch Prime Minister, warned the UK is ‘sleeping walking into a no-deal scenario’. The EU would be willing to provide an extension to article 50, in order to avoid a no-deal Brexit. To complicate matters, the Labour Party said they would back calls for a second referendum, and that is likely draw support away from whatever concessions Theresa May gets.
It was a positive session for metals yesterday. Palladium reached another record high, platinum hit a three month high, copper hit its highest level since June 2018, and gold edged higher too. The softer US dollar and the improved US-China trade relations helped the commodities drive higher.
Yesterday was a quiet day in terms of economic announcements, but there are a few announcements due out today. At 7am (UK time), the German GfK consumer sentiment report will be released and traders are expecting the reading to remain unchanged at 10.8.
US building permits and housing starts will be released at 1.30pm (UK time), and the consensus estimate is 1.29 million and 1.25 million respectively. The Case Schiller house price index report will be announced at 2pm (UK time) and on a yearly basis, it is expected to be 4.5%.
EUR/USD – has been broadly pushing lower since early January, and if the negative move continues it might retest the 1.1216 area. Resistance might be found at 1.1400 or 1.1500.
GBP/USD – has been driving higher since early December, and if it holds above the 200-day moving average at 1.3000, it might retest the 1.3200 area. The 1.2775 area region might act as support.
EUR/GBP – while its holds below the 200-day moving average at 0.8860, its outlook is likely to be negative. 0.8620 might act as support. A rally might encounter resistance at 0.9000.
USD/JPY – has been on the rise since early January, and if the bullish move continues it might target the 112.00 area. A break below 109.50, might bring 108.50 into play.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.