Global stocks climbed after President Donald Trump suspended plans for tariffs on Mexico. Sovereign bonds fell, along with Gold and the Japanese Yen, as demand for havens ebbed. The S&P 500 Index rose for a fifth straight session, led by chipmakers, retailers and auto companies, though ended off its highs of the day. Emerging-market shares jumped the most since January as Mexico’s Peso posted its best day in almost a year after the accord with the U.S. late Friday. The US Dollar edged higher while the onshore yuan fell to its weakest level since November after China’s central bank hinted it could fall further. The benchmark U.S. gauge reached the highest in a month, recovering from a painful rout in May, as large takeover deals Monday provided additional support. But the giddiness was tempered as investors looked toward the next developments in the U.S.-China trade showdown. Treasury Secretary Steven Mnuchin has said the “main progress” on trade may occur when presidents Trump and Xi Jinping meet at the G-20 summit later this month, while finance chiefs over the weekend warned about escalating risks from geopolitical tensions.
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The fact that President Trump removed the tariffs that were going to take effect shortly is a positive for the markets. However, the big question remains the trade talks with China that are overhanging the economy and the markets and is probably why the markets closed off their intra-day highs. The S&P 500 Index added 0.5% at 2887, 20 Handles off its high. In Europe, the Stoxx Europe 600 rose 0.2% and the U.K.’s FTSE 100 Index climbed 0.6%, reaching the highest in five weeks. Meanwhile the MSCI Emerging Market Index surged 1.5%, the most since January.
Here is a summary of the main changes in the FX Markets:
The Bloomberg Dollar Spot Index rose less than 0.1%.
The Japanese yen sank 0.2% to 108.43 Per Dollar.
The onshore yuan declined 0.3% to 6.9311 Per Dollar.
The Euro declined 0.1% to $1.1319.
The British Pound sank 0.3% to $1.2694 as ten candidates were announced to run and become the Conservative Leader.
Mexico’s peso surged 2.2% to 19.1989 Per Dollar.
The risk-on in Equity Markets saw the yield on two-year Treasuries increases five basis points to 1.9% while the yield on 10-year Treasuries rose six basis points to 2.14%. Finally we saw some profit taking in Europe with Germany’s 10-year yield climbing four basis points to -0.22%, the first increase in a week.
The rally in oil last Friday did not last long with West Texas Intermediate crude falling 1.3% to $53.31 a barrel. Gold sank 0.9% to $1,328.46 an ounce on the biggest tumble in two months.
This morning on the Economic Front we have UK Average Earnings and Unemployment at 9.30 am and this is followed at 10.00 am by Euro-Zone Sentix Investor Confidence. At 11.00 am we have the US NFIB Business Optimism Index. Finally we have US PPI at 1.30 pm.
June S&P 500
It took a while but finally my S&P plan worked well with the market trading higher to my 2900 sell level with a 2907 high print before selling off to my 2892 T/P level and I am now flat. Today I will again look to sell the S&P from 2906/2918 with a 2925 stop. I will now raise my buy level slightly to 2862/2872 with a 2853 stop.
No Change as I am still a seller on any rally higher to 1.1350/1.1390 with the same 1.1430 stop.
June Dollar Index
The Dollar traded sideways again over the past 24 hours and I am still flat. Today I will leave my 97.20/97.60 sell level unchanged with the same 97.95 stop.
The stronger Euro stopped the DAX from rallying much yesterday and I am still flat. I will leave my 11910/11970 buy level unchanged with the same 11855 stop. I will now lower my sell level slightly to 12205/12275 with a lower 12325 stop. Remember a break and close over 12250 for a few days is bullish for much higher prices.
The FTSE just missed my 7400 sell level before having a small sell-off and I am still flat. Despite the much weaker than expected UK GDP release the FTSE still closed higher helped by a softening Pound. Today I will raise my sell level slightly to 7415/7455 with a 7485 stop.
Dow Rolling Contract
Unfortunately the Dow just missed my 26240 sell level before falling nearly 170 points into the close and I am still flat. Today I will leave my 26240/26390 sell range unchanged with the same 26470 tight stop. Given how severely overbought the Dow is trading after its massive run higher over the past week I will now lower my buy level slightly to 25720/25880 with a 25630 lower stop.
The NASDAQ was on fire yesterday easily closing over the key 7425/7475 resistance area as mentioned over the past few days. I am still flat and today I will now raise my buy level to 7400/7460 with a 7355 stop.
In hindsight I should have hung on to my 171.73 short position from Friday given its 60 point sell-off yesterday. However as we have seen over the past few months it is extremely risky to have any position over a weekend. Today I will now lower my sell level to 171.45/171.95 with a 172.15 stop.
Gold Rolling Contract
After eight consecutive tradings of closing higher, Gold fell 0.9% yesterday. I am still flat. As I am still long Silver I will now lower my Gold buy level to 1305/1314 with a 1298 stop.
Silver Rolling Contract
No Change as I am still long from early yesterday at 14.78 with the same 14.39 stop and 14.93 T/P level. If any of the above levels are hit I will be back with a new update for my Platinum Members.