US Markets Stable Ahead of Weekend Trade Talks
US markets experienced a relatively quiet closing session of the week as investors looked ahead to key trade talks between China and the US. Comments over the weekend have led to a positive sentiment at the open today, but traders are eagerly awaiting details in the next few sessions. All three of the major US stock indices closed close to flat on Friday, the Dow losing 0.29%, the S&P slipping 0.07%, and the Nasdaq finishing flat. The dollar edged lower on the index, the DXY finishing the day down 0.30% at 100.34, although it was mixed against the majors. Treasury yields were relatively quiet, the 2-year up 1.7 basis points to 3.891%, and the benchmark 10-year closed flat at 4.378%. Oil prices pushed higher in hopes that a trade deal could increase demand levels, Brent up 1.70% to $63.91, and WTI up 1.85% to $61.02, whilst gold gained 0.58% to close at $3,323.89 an ounce, although it has opened nearly 1% down in the Asian session this morning.
Traders Cautiously Optimistic on Trade Talks
Investors will be paying very close attention to newswires in the coming trading sessions for updates on what have been touted as very positive trade talks over the weekend between China and the US. Both the US and China reported “substantial progress” over the two days of talks, and Asian markets have kicked off on the front foot today, although once again traders are ‘cautiously optimistic’ in this environment as they have seen swift turnarounds in progress over the last few weeks. Details will now be all-important, with all market participants looking for substantially lower tariffs from both sides. With US tariffs standing at 145% and Chinese at 125%, a substantial reduction is expected from both sides. Expectations are for a joint statement to be released later in the day once the US session opens, and traders are anticipating that volatility will pick up substantially on any announcement.
Geopolitics Expected to Dominate a Quiet Calendar Day
The macroeconomic calendar is very light on scheduled data releases today; however, traders are preparing for a lively few sessions ahead, with geopolitical updates likely to dominate sentiment. As above, the updates on ‘positive’ trade talks between China and the US over the weekend are likely to be the major focus for traders today. Although we do have some data and central bankers speaking that could also influence moves. There will obviously be a strong focus on Chinese markets today in the Asian session due to the trade talks, but we may also have the latest New Loans data being released during the session, with the market pricing in a 710 bio increase. There is little on the calendar in terms of data in the London or New York sessions; however, we do hear from the MPC’s Greene, Taylor, and Mann, as well as the Fed’s Kugler during the day, which could see some moves in their respective markets.
