Trump/Xi agree tariff ceasefire
At the G-20 meeting last weekend, Presidents Trump and Xi agreed to pause the current tariff was by not imposing any new tariffs for 90 days. This includes America’s proposed jump from 10% to 25% on $200 billion worth of Chinese goods scheduled for January and as a result the markets breathed a collective sigh of relief.
All indices and beta-risk currencies gapped higher at the open this morning, with the US30 CFD hitting its highest since November 12 and the NAS100 index outperforming to its highest in more than three weeks. The NAS100 CFD moved above the 55-day moving average, which is at 7,099 today, for the first time since October 5.
The Aussie surged as much as 0.93% to its highest in almost three months after weekend developments while the typical safe havens of yen and US dollar saw their demand waning.
Oil prices jump
West Texas Intermediate soared the most since June 22 after Saudi Arabian and Russian oil ministers agreed to extend their deal to “manage” oil markets into 2019. Traders viewed this as paving the way for an announcement about a consolidated cut in output at the OPEC meeting in Vienna on December 6. WTI had managed its first up-week in eight weeks last week, and gains have accelerated this morning. The next possible resistance point is the 23.6% Fibonacci retracement of the October/November drop, which is at $55.890.
Can European indices match gains?
Despite the positive news from the G-20 meeting, European bourses still have a lot of clouds hanging over them. For the UK, Brexit politics are still an issue, with debate on the proposed Brexit deal starting today in the UK parliament. For Europe, discussions with Italy on its budget plans for next year are ongoing and, whilst Italy has made conciliatory noises, nothing concrete has yet to emerge.
The Germany30 has been particularly under pressure. The index fell for the fourth consecutive month last month, even as Wall Street posted gains. However, the index did manage to survive an attack on 55-month moving average support, which is now at 11,221, and managed to close above it, as it has done for the past seven years. Maybe the weekend developments will allow the index to build a near-term base.
PMI fest to start the month
The first trading day of the month sees a slew of PMI data for November released across the globe. The ones to attract the most attention will likely be the German and EU Markit manufacturing readings along with the US ISM equivalent. According to recent surveys, November is seen as a month of consolidation for the PMIs following the recent slide.