Market Brief: US-China Trade Talk Snag Overshadows Powell’s Testimony

See a summary of the top market themes and trends from today's US trading session!


View our guide on how to interpret the FX Dashboard.

  • In his semiannual Humphrey-Hawkins testimony to Congress, Fed Chairman Powell did not tread any new ground, reiterating his view that monetary policy is appropriate and the US economy is doing well.
  • Separately, the first phase of public hearings around President Trump’s impeachment began. Prediction markets are pricing in about a 75% chance that the president will be impeached (though not necessarily removed from office), but the market impact so far has been limited.
  • Reports from Dow Jones indicate that US-China trade talks have hit a “snag” over the exact amount of agricultural purchases, leading to a midday swoon in risk appetite.
  • FX: The New Zealand dollar remained the strongest major currency on the day after the RBNZ surprised traders by refusing to cut interest rates in the Asian session. The loonie was the weakest major currency, despite today’s rise in correlated oil prices.
  • US data: US CPI came in stronger than expected at +0.4% m/m vs. +0.3% eyed, though the more important Core CPI reading merely met expectations at +0.2% m/m.  
  • Commodities: Gold and oil both rose nearly 1% on the day, with the latter benefitting from the EIA’s decision to cut global oil demand forecasts by 90k bpd.
 
  • US indices closed generally in positive territory after shrugging off the midday trade talk snag.
  • Utilities (XLU) were the strongest sector today, gaining nearly 2%, while Financials (XLF) were the weakest.
  • Stocks on the move:
    • 2019 standout stock Advanced Micro Devices (AMD) gained another 2% after announcing that Chinese giant Tencent would use its chips in servers.
    • Walt Disney (DIS) surged 7% after announcing that its newly-launched Disney+ streaming service has already surpassed 10M subscribers.
    • Marijuana company Tilray (TLRY) slipped -3% after reporting a -$0.50 loss per share, though the firm did beat revenue expectations. Two more major marijuana firms report earnings on Thursday – see our preview here.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.