- Reuters / Russell Boyce
- US stocks are set to gain on Wednesday amid a rocky week of escalations in the US-China trade war and global central bank easing.
- Global stock traders were in a mixed mood.
- “The trade war is weighing on the one side, but the reaction function is more easing.”
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US stocks are set to gain on Wednesday amid a rocky week of escalations in the US-China trade war and global central bank easing. Global stock traders were in a mixed mood. Asian futures were red on the close while European stocks rallied after three straight sessions of declines.
“This is one of those moments where everyone’s trying to pick a side (up or down) and it’s not abundantly clear which direction the market is going short term,” said Neil Wilson at Markets.com. “The trade war is weighing on the one side, but the reaction function is more easing.”
“All else equal I think you see more flight to quality – big US stocks and dollar over the rest,” he said. “But the failure to make the 2890 level on S&P 500 yesterday looks risky for bulls now – massive rising wedge (again) and breakdown that looks ominous.”
Here’s a look at global markets on Wednesday as of 4:00 am in New York:
- The yuan fell 0.3% to just under 7.04 per dollar, with China’s currency being allowed to trade 2% above or below the benchmark set by China’s central bank benchmark of 6.9996.
- US futures gained, with the S&P 500 up 0.3%, and Nasdaq up 0.5%.
- European stocks in the early hours of trading were rallying, with the DAX up 1.3% and Euro Stoxx up 1.0%.
- Asian stocks slid on the close, with the Nikkei 225 and Shanghai Composite both down 0.3%, and the Hang Seng up marginally 0.1%
- Bonds yields are rallying as investors focused their attention back to the trade war.
- Oil fell overnight and crude WTI hovered at about $53.63, while Brent was at $58.80.
- Gold rallied 1% to $1,498.35.
New Zealand’s Fed aggressively cut rates to a fresh all-time low on Wednesday, prompting the New Zealand Dollar to fall sharply. Analysts were expecting a 0.25 basis point cut, but it was double that, with rates being cut by half a basis point. The country faces sluggish growth conditions due to the global economic slowdown, as well as being one of the direct losers of the trade war with China being its biggest export partner.
India’s central bank likewise cut rates, with it’s fourth rate cut of the year in an attempt to boost the economy. the Reserve Bank of India cut rates by 35 basis points, again a larger cut than expected of 25 basis points.