US Stocks To Open Lower, Gold Steady But Oil Slips

U.S. stocks may open lower Monday as President Donald Trump’s skepticism over the border wall deal seems to have raised concerns on yet another government shutdown.

The lower opening of U.S. stock index futures reflected that mood. At 3:15 a.m. EST, Dow futures traded just 89 points up. S&P 500 and Nasdaq futures indicated a decline as well.

Among the companies reporting earnings today are Caterpillar, Whirlpool and AK Steel.

In Europe, the pan-European Euro Stoxx 600 index slid lower in most of the bourses. Mining stocks were an exception and rose nearly 1 percent, thanks to the industry’s huge exposure to China.

Shares of Rio Tinto climbed 2.5percent after an upward price revision by Jefferies.

Ocado shares jumped 3.6 percent after reports of Marks & Spencer mulling a takeover.

Asia stocks slide

Asian stocks slipped as the U.S.-China trade talks loomed high. Shares traded lower in the afternoon and were preceded by a volatile session. Investors are watching new developments at the U.S.-China trade talks in which Vice Premier Liu will lead the Chinese delegation.

Among Chinese markets, mainland bourses shed early gains and closed lower. The Shanghai Composite lost 0.18 percent to close at around 2,596.98, while the Shenzhen ended the day lower at around 7,589.58. The Shenzhen composite index slipped 0.377 percent to close at 1,314.99.

The Hang Seng index at Hong Kong was flat. Japan’s Nikkei 225 slipped 0.60 percent and closed at 20,649.

Explaining the market concerns, Simon Baptist, chief economist at the Intelligence Unit of the Economist, told CNBC that there is an unwillingness by China to make concessions for investments the way U.S. firms had wanted.

He cited the pressure from European and U.S. governments on Chinese firm Huawei as the reason for Beijing refusing any change in its policy on foreign firms.

The two-day meeting of the Federal Open Market Committee’s (FOMC) from Tuesday will also influence the market mood. Fed Chair Jerome Powell and his team may decide to pause the interest rates hike, reports quoting Tai Hui, the chief market strategist at J.P. Morgan Asset Management, said.

Oil down on U.S. Rig Fleet Expansion

Meanwhile, oil prices crashed Monday after U.S. oil firms expanded the number of rigs for higher crude production despite plummeting demand from China that is reeling under new signs of economic slowdown.

The U.S. crude oil futures were at $53.43 per barrel at 0253 GMT, down by 0.5 percent from their last settlement. International Brent crude oil futures were down at $61.50 a barrel, slipping 0.2 percent.

The number of US rigs looking for new oil in 2019 will be 862, with 10 more rigs being added, noted the weekly report by energy services firm Baker Hughes.

“We expect U.S. crude oil prices to be in the range of $50-$60 per barrel in 2019 and about $10 more per barrel for Brent,” Tortoise Capital Advisors said in its oil market outlook for 2019.

Gold at a high but steady

Gold prices were unchanged Monday, after hitting a seven-month high as hopes mounted that the U.S. Federal Reserve will retain the current interest rates.

Spot gold was firm at $1,302.58 per ounce by 0308 GMT, while U.S. gold futures climbed 0.3 percent to $1,301.90 per ounce.

“Gold is having a very positive macro stance in the sense the U.S. Fed is going to be more accommodative along with the European Central Bank,” noted Edward Moya, an analyst at Oanda.

Gold prices are rising amid gathering expectations on lower interest rates and end up reducing the scope of opportunity cost in holding the non-yielding bullion.

“The Fed meeting could be instrumental in triggering more dollar selling as well, as could positive Brexit developments, which is why we would stay long on gold going into the week,” explained analyst Edward Meir of INTL FCStone in a note.

International Business Times

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya