Opening Bell: Futures Ignore Trade, Tech Jitters; WTI Surges; USD Drops


  • European shares rebound from 5-day losing streak, US futures climb
  • WTI surges on surprise inventories drop
  • Dollar traders take profit on return to risk

Key Events

European shares rebounded from a five-day stock rout and futures on the , and climbed higher this morning, making up for a mixed Asian session that felt the pinch of re-ignited trade tensions. The advanced with technology firms and automobile makers.

Earlier, Asian shares sold off as preliminary talks for a trade resolution ahead of the G20 meeting on November 30 fell through, quashing hopes that US and Chinese leaders would be able to make some headway anytime soon. Chinese stocks on the closed higher after erasing early losses, as a rebound in property and healthcare stocks offset losses in energy shares sparked by Wall Street selloffs and a plunge in prices.

Global Financial Affairs

Yesterday, US shares tumbled for a second day, with price slumps in energy stocks magnifying the broader selling. Apple (NASDAQ:) spearheaded a continued rout in tech hardware firms. Retailers were also dumped by investors despite strong sales results, amid worries that new online customers would entail additional heavy investment costs.

The briefly slid 10 percent below its September record close before clawing back just above the threshold and closing 1.82 percent in the red. The slid 1.7 percent, almost 14 percent below the closing high it reached in August. The shed more than 500 points, or 2.21 percent, as angst spread across global equity markets.

Considering the , with its listed domestic, non-export reliant companies, failed to substantially outperform peers (-1.65 percent), we don’t believe the current stock rout is trade-related. Rather, it seems driven by the ongoing slide in energy prices. This would also explain the underperformance of the Dow, which features a high concentration of energy companies.

AAPL Daily Chart

AAPL Daily Chart

The Dow’s decline was also aggravated by the Apple selloff. The tech behemoth makes up about 5% of the index’s weight. At the end of October We forecast the stock may top out even amid stellar ; it comfortably reached our target. Technically, the price found support above its long-term uptrend line. After a 24 percent correction from its record peak, dip buyers may be happy to pick up such a palatable discount.

Overseas trading seemed more heavily impacted by trade headwinds than the US market—though the sector, whose continued growth is dependent on the smooth functioning of supply chains, represents an obvious exception to this trend. We believe that the Fed’s continued hawkish rhetoric and outlook for is currently having a much greater impact on US stocks than the trade risk, even when benchmarked against the softer guidance posted by US company executives due to higher trade tariffs.

Moreover, the early signs of a slowdown in global growth, and its impact on US growth—recently highlighted by Fed speakers—also weighs on US market sentiment.

DXY Daily Chart

The is paring yesterday’s risk-off gains, as investors rotate back into equities, confirming our recent bullish call.

WTI Daily Chart

WTI Daily Chart

Oil’s plunge paused on a surprise reduction in . Technically, the WTI price provided a decisive downside breakout to a bearish flag, as we predicted, with a high potential for a much sharper selloff.

Up Ahead

  • Canadian for September are released on Wednesday.

  • October figures on US will come out on Wednesday.
  • data for October is due on Wednesday.
  • data, out later today, may post the first seasonal draw of the year, driving the commodity higher.
  • Canadian quarterly report is released on Thursday.

  • Bank of Canada Governor speaks on Thursday.

  • Canadian and are released on Friday.

  • Canadian and are released Friday.

  • US markets will see a holiday-shortened week, with Black Friday kicking off the holiday shopping season after Thanksgiving break.

Market Moves

Stocks

Currencies

Bonds

Commodites

  • The gained 1.1 percent.
  • West Texas Intermediate crude increased 1.4 percent to $54.20 a barrel, the largest climb in seven weeks.
  • LME edged 0.6 percent higher to $6,220.00 per metric ton.
  • climbed 0.1 percent to $1,223.42 an ounce.



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