Global stock indices dropped across the globe yesterday as the fallout from the latest FOMC meeting continued to exert pressure over the course of the trading day. Trade deal concerns added to the downward move in stocks as expectation of a agreement between China and the US was pushed further out. The major US indices all closed in the red again with the Dow leading the way, down 0.46%, the S&P 500 finished 0.21% in the negative and tech stocks held up the most with the Nasdaq closing just 0.16% down. Treasury yields jumped higher with the barometer 10 year trading back above 2.55% and the dollar remained bid throughout the day’s trading, the Dxy back up through 97.80 on the Asian open. Oil took a dive with WTI dropping over 3% on the day as supply concerns eased significantly on news of increased production and stock levels, WTI now at $61.8/b and Brent at $70.75/b. Gold remains pressured and is sitting just above recent yearly lows.
The long running trade discussions between the US and China are once again leading to further caution in the market. Talk that crucial differences are still unresolved despite the large numbers of pan pacific frequent flyer points being accumulated by both negotiating teams is starting to exert more pressure on investor sentiment. US officials have been advising of ‘progress’ being made over the last few weeks but it feels like the market will need some concrete evidence of this in the short term if growth concern is not going to increase and lead to further downside moves in risk assets. A Chinese team of 100 is due to hit Washington next week and investors will now be hoping for a positive outcome from those crucial talks.
Looking ahead to today’s trading day and most market participants will be expecting range bound conditions ahead of tonight’s Non-Farm Payroll data release. It’s relatively quiet in terms of economic data releases across the other sessions although traders in Australia will pay particular attention to the latest Building approvals numbers due out this morning and the Service PMI data in the UK will be closely monitored as usual. The market is expecting to see around 180k for the headline NFP figure early in the New York session with the unemployment rate sticking at 3.8% and Average hourly earnings rising 0.3% on the month. As usual anything well outside expectation will see some strong moves in the market.