Yesterday, the negotiations continued between China and the U.S. over a trade deal while the EU and Great Britain continued their deliberations over the Brexit. In the case of both of these news stories, the days are turning into weeks while the market continues to wait for their outcomes to affect its future direction.
President Trump remains active, saying yesterday that trade talks are “progressing,” and an official from the U.S. Department of the Interior noted that the administration was preparing in the upcoming weeks to release Trump’s plan for offshore oil drilling.
New York Fed President John Williams spoke yesterday, suggesting that if the economy remains strong and if inflation continues to drop, there would be a case for lower interest rates.
This week’s highlight in the U.S. will be Friday’s job number. Also important was the ADP Research Institutes's employment report released yesterday. David Rosenberg, the Chief Economist & Strategist at Gluskin Sheff, said that the data reflected an “8k decline in employment at small companies” and commented that this was "the largest job-shedding since December 2013, and remember, the drop in the last cycle led the recession by six months.”
Also due to be released Friday and Saturday are China’s trade balance numbers, which are worth monitoring.
Overnight, 8 out of 12 Asian stock markets closed higher, but the Nikkei and Hang Seng were modestly lower while the Shanghai was barely positive. In Europe this morning, all 13 stock markets are currently trading lower, and U.S. equity index futures are also dragging lower.
Meanwhile, FedEx CEO Fred Smith, echoing Caterpillar’s CEO’s words from the prior day, offered an optimistic and strong view of the U.S. economy but was more pessimistic about the global economy. Like CAT, FedEx is also seen as an economic barometer.
There are 100 corporate earnings scheduled for release today, including Kroger Co. and H&R Block. The economic calendar is quiet with the most relevant items coming before the market opens.
This week has been a continual lower drag in the U.S. equity markets. In today’s Globex session, the S&P 500 futures index has traded down to its lowest levels since February 15th.
We see the 2760 to 2765 area as a vital place for bulls to control. Holding support there would lead us to target the 2780 to 2785 area and then 2795. However, if the 2760 0 2765 support area fails, then the next level of support is all the way down around 2730. We do think there will be a higher day either today or tomorrow, but we are also watching to see if bearish momentum picks up. Thus far, this selling has been orderly, but if the selling velocity and volume begin to pick up, then we would only want to trade from the short side.
Today’s Economic Calendar:
- Challenger Job-Cut Report 7:30 AM ET
- Jobless Claims 8:30 AM ET
- Productivity and Costs 8:30 AM ET
- EIA Natural Gas Report 10:30 AM ET
- 3-Month Bill Announcement 11:00 AM ET
- 6-Month Bill Announcement 11:00 AM ET
- 3-Yr Note Announcement 11:00 AM ET
- 10-Yr Note Announcement 11:00 AM ET
- 30-Yr Bond Announcement 11:00 AM ET
- 4-Week Bill Auction 11:30 AM ET
- 8-Week Bill Auction 11:30 AM ET
- Lael Brainard Speaks 12:15 PM ET
- Consumer Credit 3:00 PM ET
- Fed Balance Sheet 4:30 PM ET
- Money Supply 4:30 PM ET