U.S. indices joined a global rally on Wednesday fuelled by positive economic news out of China and Hong Kong’s decision to withdrawal its extradition bill. Crude oil gained the most since June after the U.S. announced plans for further sanctions on Iran and comments from Russia regarding production cuts. The best performing stocks were in the Semiconductors & Semiconductor Equipment (+3.06%), Automobiles & Components (+2.64%) and Consumer Durables & Apparel (+2.07%) sectors. Looking at Thursday, Lululemon Athletica (LULU) is anticipated to report 2Q earning after the close. The Federal Reserve released its Beige Book stating the economy grew moderately through the end of August. Even as tariffs and trade policy threaten the U.S. economy, the majority of businesses have bullish outlooks for the near future. Manufacturing activity is down from the previous report. The China trade war tariffs have put pressure on retailers and manufacturers as input costs have slightly increased. On the economic data front, U.S. trade deficit amounted to $54.0B in July (vs. $53.4B expected). The S&P 500 (2,944.01) trades above its 20d moving average (2,898.81 – positive slope) but stays below its 50d moving average (2,944.01 – flat slope).
European markets are expected to start on a positive note.
Foreign Exchange
The US dollar was under pressure against all of its major pairs except for the JPY. On the economic data front, the MBA mortgage index dropped 3.1% for the week ending August 30 compared to a decline of 6.2% in the prior week. This marks lows not reached since April. The US trade deficit shrank to 54.0B in July which was higher than the 53.4B expected. The deficit has been decreasing since May. The Fed released its Beige Book stating the economy grew moderately through the end of August. Even as tariffs and trade policy threaten the US economy, the majority of businesses have bullish outlooks for the near future. Manufacturing activity is down from the previous report. The China trade war tariffs have put pressure on retailers and manufacturers as input costs have slightly increased.
The Euro was bearish against all of its major pairs with the exception of the JPY an USD. In Europe, the euro-zone PMI composite index was 51.9 in the second reading of August compared to 51.8 in first reading and 51.5 a month earlier. UK PMI composite index fell to 50.2 in August from 50.7 in July. It was expected to be 50.5.
The Australian dollar was mixed against its major pairs.
Commodities
After the close of Wall Street, WTI Crude Future (OCT 19) was up $2.4 to $56.36. The contract was above its 20D MA (@ $54.91) and below its 50D MA (@ $56.37).
Gold was up $6.8 to $1553.9. The precious metal was above its 20D MA (@ $1519) and above its 50D MA (@ $1462).
Copper Future (DEC 19) on Comex was up 6.4c to 259.2c/lb. The contract was above its 20D MA (@ 258.15c) and below its 50D MA (@ 264.61c). In Europe, the London Metal Exchange reported its copper inventories decreased 6500 tons to 323550 tons.