August 10, 2020

Stock Futures Up, US-China Tensions In Focus

Stock Futures Up, US-China Tensions In Focus

The Dow Jones Industrial Average futures are trading higher, while investors continue to make sense of presidential executive orders to address some issues surrounding the second stimulus aid package. The focus among traders today is on the political tensions between the U.S.-China especially the fact that we have a review of phase-one trade deal between Washington and Beijing this week. Gold prices have eased from their record highs but the encouraging sign is that it is still trading above the $2,000 mark.

Unemployment Benefits, Payroll Tax Cuts, Extending Eviction Moratorium, Deferred Student Loan

President Trump on Saturday signed four executive orders to address some of the challenges in relation to the second stimulus package. The unemployment benefits have been extended to $400 a week, previously they were at $600 per week. Trump has said that the order also allows employers to defer payment of the employee portion of the payroll tax for Americans, making it less than $100,000. One order would take care of the eviction moratorium. The student loan repayments were also deferred.

For investors, the focus is likely to remain to on the second stimulus package and both sides, Democrats and Republicans are still apart by trillions of dollars. It doesn’t seem that both sides are still willing to agree on any common grounds, and this is likely to adversely influence the U.S. stock market. But for now, investors are cheering some of the good news that came in the shape of presidential orders.

Coronavirus Update:

The U.S. has passed the 5 million coronavirus cases level, this is not a small number by any metric and investors are wondering where this number will stop before we get a coronavirus vaccine. Germany is also seeing a surge in the coronavirus cases, jumping to the highest level in 10 days.

U.S.-China Tensions And Trump

The U.S.-China phase-one trade deal, which took nearly a year to agree on, is set to be reviewed this month. The trade negotiators from both sides will be joining this meeting and the progress of the deal will be reviewed since its inception. China has pledged to increase its purchase of U.S. goods by $200 billion, from its 2017 level. However, coronavirus has clearly made an impact on the purchase and China is running behind by nearly $77 billion in purchases. The import of agriculture goods, something that Donald Trump was most proud of and something that helped him to become more popular among farmers, is lagging the most.

Upcoming Economic Numbers

It is all about the upcoming U.K.’s GDP number this week. It is expected to drop the most in Europe and the plunge could take down the GDP number to -20.5% which is greater than the Spanish GDP contraction of 18.5%.

Global Stock Market Today

The global stock market had a bit of up day. Stocks moved higher in China, the stock rally boosted the Shanghai index higher by 1.05%. The ASX index also advanced 2.00% while the Japanese stock index dropped by 0.39%. The HSI stock index, fell by 0.20%.

Gold Prices Made Another Record High

The yellow metal is off from its record high. It is likely to continue its journey to the upside, as there is still an enormous amount of uncertainty in relation to global economic recovery. The current retracement could be an opportunity for investors to bag the precious metal at a decent discount. Keep an eye on the 50 and 100-day moving on a daily time frame which are important price levels.

Dow Index and S&P500 Index: Market Breadth

The U.S. stock market’s breadth confirms stock investors are pushing the coronavirus stock market rally higher. 57% of the Dow Jones stocks traded above their 200-day moving average on Friday. 

The S&P 500 stocks confirm bulls are in control of the stock rally. 57% of the shares traded above their 200-day moving average on Friday. 

Dow Jones and S&P 500 Futures Today

The Dow Jones futures are higher by 160 points, stock traders continue to keep a close eye on the U.S political tensions with China.  

The Dow Jones Industrial Average futures has started the week on the front foot. Today’s price action is already beyond the previous day’s high. It seems that the Dow stocks have a backing from the bulls, as price is trading above the 50, 100 and 200-day SMA on a daily time frame. The 50-day SMA of the Dow Jones continues to trade above the 100-day SMA, a true bull signal.

The Dow Jones Industrial moving average index’s futures are trading above all the three important moving averages: 50, 100 and 200-week SMA on a weekly time frame as well. The Dow Jones is nearing an important resistance level of $27,622 and investors may want to be careful about this as some sort of profit-taking could take place.

The S&P 500 index, the U.S. stock index, which shows the overall picture of the U.S stock market, is showing more strength. The S&P 500 stocks are getting close to all-time highs and they can reach the all time-high mark this week. The S&P 500 stock index is trading above the 50, 100 and 200-week SMA and this confirms bulls are firmly in control of the stock market rally. 

Stock Market Rally 

The S&P 500 index closed on a positive note on Friday, the S&P 500 stock index soared 0.06%. Tech sector led the gains for the S&P 500 stocks and eight out of eleven sectors closed with gains. Biogen stock contributed the most gains, up 10.1%. Illumina was the biggest drag, it declined 10.9%. The S&P 500 stock index is 1.24% below its 52 weeks high.

The Dow index jumped 49 points on Friday and the Dow stocks pushed the index higher by 0.17%. 19 stocks of the Dow Jones Index soared, and 11 shares of the Dow index declined. Goldman Sachs stock jumped higher by 1.97% and was the biggest mover for the Dow while Apple stock declined 2.45%, the biggest drag for Dow Jones industrial average index.  

The NASDAQ composite, a tech-savvy index,  127 points Friday.