Market News & Analysis


Top Story

Trump and the S&P 500 need a win on trade

In the lead up to this week’s U.S. - China trade talks in Washington, an exchange of goodwill gestures including a two-week delay to the October 1 tariff increase in order to avoid a clash with the 70th anniversary of the Peoples Republic of China sparked hopes of a trade truce or a “mini deal.”

After the last three trade truces ended in escalation it is difficult to assign an accurate probability to an agreement being reached this time around. Suffice to say that with President Trump now embroiled in impeachment and tax issues a “win” on trade would be a welcome development for President Trump and the slowing U.S. manufacturing sector.

Perhaps sensing this, Chinese officials have taken the opportunity to press home a perceived advantage as weekend reports alluded that the range of topics Chinese officials are willing to negotiate on has narrowed considerably. This has overshadowed overnight headlines that China is open to agreeing a smaller deal now with a view to continuing negotiations next year.

Unsurprisingly the S&P500 has given back a chunk of last Friday's gains as investors moved to the sidelines. A sensible course of action to avoid the increase in trade headlines likely forthcoming in the coming days and what appears to be an inevitable move towards escalation.  

Technical update:

After breaking and closing below the key 2940/30 support zone mentioned in this article last week https://www.cityindex.com.au/market-analysis/will-the-sp-500-remain-teflon-coated-in-october/ the S&P found support and rallied from ahead of the 200-day moving average currently at 2847.

The rally is viewed as countertrend in nature and while the S&P500 remains below the 3025/30 resistance zone and year to date highs, our base case remains for the current correction to continue towards wave equality support 2770ish with scope to 2728.75 (May lows).

In the unlikely event that trade talks do deliver a more broad-based trade agreement, a break and close above the 3025/30 resistance would be viewed as a precursor to a move towards 3150.

Trump and the S&P 500 need a win on trade

Source Tradingview. The figures stated are as of the 8th of October 2019. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

Disclaimer

TECH-FX TRADING PTY LTD (ACN 617 797 645) is an Authorised Representative (001255203) of JB Alpha Ltd (ABN 76 131 376 415) which holds an Australian Financial Services Licence (AFSL no. 327075)

Trading foreign exchange, futures and CFDs on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange, futures or CFDs you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss in excess of your deposited funds and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange, futures and CFD trading, and seek advice from an independent financial advisor if you have any doubts. It is important to note that past performance is not a reliable indicator of future performance.

Any advice provided is general advice only. It is important to note that:

  • The advice has been prepared without taking into account the client’s objectives, financial situation or needs.
  • The client should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation or needs, before following the advice.
  • If the advice relates to the acquisition or possible acquisition of a particular financial product, the client should obtain a copy of, and consider, the PDS for that product before making any decision.

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.