US futures
Dow futures 0.70%, S&P futures 0.86% & Nasdaq futures 1.13%
In Europe
FTSE 0.59% & DAX 1.60%
- Stocks recover as US-China trade tensions ease
- Regional worries calm as more reports without issues
- The US government shutdown could end this week
- Oil falls to a 6-month low
US-China trade worries & regional bank worries calm
U.S. Stocks are heading higher in early trade, boosted by optimism surrounding U.S.-China trade talks hoped as the US government shutdown could soon end, and as investors gear up for a busy week of corporate earnings, including from Tesla and Netflix.
Optimism is rising that the US government shutdown could soon end after the White House economic advisor told CNBC that the shutdown would likely end this week. This would bring back data for the markers and the Fed to assess the health of the US economy.
Concerns over US regional banks have also eased after solid results from several more regional banks. Sentiment has been further lifted by comments from Trump over the weekend that he will meet Chinese Xi Jinping for talks, de-escalating trade tensions. Tensions escalated on Friday, October 10th, when Trump threatened additional tariffs on China. However, recent reports suggest Trump has lowered tariffs on dozens of products from China, pleasing the market.
The US economic calendar is quiet owing to the government shutdown, but US inflation on Friday will be key. The data comes as the Federal Reserve is expected to cut rates by 25 basis points in October and again in December.
Corporate news
Apple is rising after a broker upgrade from Loop Capital, raising its price target to $315 from $266, citing strong, rather than expected, iPhone 17 demand and a multi-year growth cycle extending until 2027.
AMD is rising after analysts at Bank of America raised its target price to $300 from $250 per share, maintaining its buy rating.
Dow Jones forecast – technical analysis.
The Dow Jones broke below the rising trendline dating back to late April. The price ran into support at 45200 and has recovered back above the 50 SMA. The long lower wick suggests there was little selling demand at the lower levels. Buyers will look to extend the recovery above 46,700, the rising trendline to bring 47,000, and fresh record highs. Support can be seen at 45,200, the weekly low. Below here, and 45000 sellers could look towards 44,500.
FX markets – USD flat, GBP/USD slips
The U.S. Dollar is broadly unchanged against its major peers as investors weigh up the prospect of a US credit risk, US-China trade tensions, as well as the prospect of a Fed rate cut next week.,
EUR/USD is holding steady as investors take France’s credit rating downgrade in its stride as the political situation in France steadies. However, budgetary problems remain, which could limit the upside in the EUR. PMI data on Friday.
The GBP/USD is struggling around 1.3415 ahead of a busy week on the UK economic calendar. UK CPI data, retail sales and government borrowing data will be particularly in focus ahead of November's budget. UK CPI is expected to rise towards 4%. However, the pound is not benefiting from the Bank of England's slower stance towards monetary policy.
Oil extends its decline from last week
Oil prices are falling, extending losses from last week and dropping to multi-month lows on concerns over an oil oversupply.
The decline comes after last week’s report from the IEA, which raised its projection for a market surplus amid rising production from OPEC+ members.
Concerns over the demand outlook are also impacting oil prices as worries that the US-China trade war could slow global growth, after the two sides implemented a tit-for-tat move to disrupt global freight.
Uncertainty over the implications of India buying Russian oil poses another question for the market. Trump has applied an additional 25% tariff on India as a punishment for buying Russian oil. While PM Modi has said that it will stop, there are no concrete signs yet.
