Daily markets morning round-up: E-mini S&P, gold, crude & Treasuries

E-mini S&P 500 (September)

Yesterday’s close: Settled at 2766.25, down 13.50

Fundamentals: Global equity benchmarks are ripping back this morning as trade tensions have found a way into the back seat of investors’ minds. In fact, the small-cap and domestically focused Russell 2000 notched a record high on Monday, matched it yesterday and extended such gains in today’s session. The Nasdaq is less than 1% from its recent record high and 2% off yesterday’s low. The broader and more multinational S&P 500 Index is in much more of a consolidation since its January 29th record high but is still nearly 1.5% from yesterday’s low. In the last month the German DAX is -3.3%, the Nikkei is -1.9% and the Hang Seng is -4.9%. While these figures are through today’s positive session, their recoveries are shallower than the S&P. There are two takeaways from the last 24 hours.

First, the additional $200 billion in tariffs on China spoken of by President Trump is, for now, only a threat ahead of July 6 and as we described yesterday, this means the United States and China are not yet in a full-blown trade war. Second, this sheds light on our statement yesterday, “U.S equity markets are the most promising asset class in the world.”

Firming the global tape is speculation that China, in the wake of trade tensions and recently soft economic data will announce some sort of policy stimulus. As for other central banks, the European Central Bank holds a panel discussion with ECB President Draghi, Fed Chair Powell, Bank of Japan Governor Kuroda and RBA Governor Lowe at 8:30 a.m. Central. This will be Powel’s first appearance since last week’s policy meeting. Draghi already exclaimed his dovish rhetoric describing patience in the timing of their first rate-hike in the second half of 2019 during a speech yesterday. Existing Home Sales are due at 9:00 am CT.

Technicals: Yesterday, we said, “the tape is trading around our major three-star support level at 2745.50-2746.75; this is a level in which we hope you have capitalized in some manner against.” For us, this achieves our first downside target on the week and a failure to close below here must Neutralize our Bearish Bias. Price action did close out above first key resistance at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.


Crude oil (August)

Yesterday’s close: Settled at 64.90, down 0.79

Fundamentals: Between trade tensions and the official start of the OPEC meeting tomorrow, the focus shifts to U.S. inventories today. Yesterday’s API read showed -3.016 mb Crude, +2.11 mb Gasoline and +0.75 mb Distillates. Crude’s larger draw than expected was offset by surprise builds for each of the products. Today’s official EIA data is calling for -2.1 mb Crude, +0.188 mb Gasoline and -0.164 mb Distillates. In fact, as a whole, API’s read was fairly bearish. Still, Crude has held well with a firm tape into this morning. This is partly so because some analysts expect to see a larger draw on today’s read than both the expectations and API. Without any outliers in the products, the headline read on Crude will clearly stand out and drive price action. Furthermore, estimated U.S shale production will be closely watched ahead of the OPEC meeting. Last week, the lower 48 states added 100,000 bpd pushing production to a new weekly estimated record of 10.9 mbpd. 

Technicals: Price action traded to a low of 64.23 yesterday and did stick its nose below major three-star support for the third time in three sessions. However, as we have been calling for, this level is most crucial on a closing basis and each settlement has clearly held out above. As we denoted yesterday, first key resistance at ...  Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.


Gold (August)

Yesterday’s close: Settled at 1278.6, down 1.5

Fundamentals: Gold has completely shaken off U.S. and China trade tensions and couldn’t rally when equity markets were under pressure early in yesterday’s session. The major focus for the metal has been the dollar. While we remain long-term bearish on the dollar and we do feel the upside from here is very limited, this also does not mean the high for the dollar is in. Gold is likely to remain choppy, with little to no enthusiasm until it finds a catalyst from a weaker dollar. This does not mean that geopolitics cannot support gold and at some point, then we firmly believe they once again will. But we remain cautious after little interest upon the Italian crisis and after it sold off Friday with the announcement of trade tariffs between the U.S. and China. Today will be important for the metal as head central bankers speak at a panel hosted by the European Central Bank; ECB President Draghi, Fed Chair Powell, BoJ Governor Kuroda and RBA Governor Lowe. Existing Home Sales are due at 9:00 am CT and housing data yesterday was mixed.

Technicals: Gold again held major three-star support on a closing basis, this was the third session in a row. However, today’s tape has barely managed to cling to this level while trekking to a new low. We have minor support at... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels

About the Author

Bill Baruch is President and founder of Blue Line Futures, a leading futures and commodities brokerage firm.